Hedge Funds Are Buying Afya Limited (AFYA)
At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Afya Limited (NASDAQ:AFYA) makes for a good investment right now.
Is Afya Limited (NASDAQ:AFYA) a superb investment now? The best stock pickers are getting more bullish. The number of long hedge fund bets moved up by 7 lately. Our calculations also showed that AFYA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). AFYA was in 7 hedge funds' portfolios at the end of September. There were 0 hedge funds in our database with AFYA holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30614" align="alignnone" width="600"]
Howard Marks of Oaktree Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to review the latest hedge fund action surrounding Afya Limited (NASDAQ:AFYA).
How are hedge funds trading Afya Limited (NASDAQ:AFYA)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7 from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AFYA over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Afya Limited (NASDAQ:AFYA) was held by Oaktree Capital Management, which reported holding $17.9 million worth of stock at the end of September. It was followed by Driehaus Capital with a $14.9 million position. Other investors bullish on the company included Key Square Capital Management, Third Point, and Millennium Management. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to Afya Limited (NASDAQ:AFYA), around 3.14% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.49 percent of its 13F equity portfolio to AFYA.
Consequently, key hedge funds were breaking ground themselves. Oaktree Capital Management, managed by Howard Marks, established the biggest position in Afya Limited (NASDAQ:AFYA). Oaktree Capital Management had $17.9 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also initiated a $14.9 million position during the quarter. The following funds were also among the new AFYA investors: Scott Bessent's Key Square Capital Management, Dan Loeb's Third Point, and Israel Englander's Millennium Management.
Let's now take a look at hedge fund activity in other stocks similar to Afya Limited (NASDAQ:AFYA). We will take a look at Guangshen Railway Co. Ltd (NYSE:GSH), United Community Banks Inc (NASDAQ:UCBI), CRISPR Therapeutics AG (NASDAQ:CRSP), and Fastly, Inc. (NYSE:FSLY). This group of stocks' market caps match AFYA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSH,2,4202,1 UCBI,13,50527,1 CRSP,16,150251,3 FSLY,16,126686,3 Average,11.75,82917,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $67 million in AFYA's case. CRISPR Therapeutics AG (NASDAQ:CRSP) is the most popular stock in this table. On the other hand Guangshen Railway Co. Ltd (NYSE:GSH) is the least popular one with only 2 bullish hedge fund positions. Afya Limited (NASDAQ:AFYA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AFYA, though not to the same extent, as the stock returned 7.4% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
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