The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Avista Corp (NYSE:AVA) based on those filings.
Avista Corp (NYSE:AVA) investors should be aware of an increase in support from the world's most elite money managers in recent months. Our calculations also showed that AVA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="398"] David Harding of Winton 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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a gander at the fresh hedge fund action surrounding Avista Corp (NYSE:AVA).
How have hedgies been trading Avista Corp (NYSE:AVA)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in AVA over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Avista Corp (NYSE:AVA), which was worth $117.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $8.2 million worth of shares. Winton Capital Management, GLG Partners, and Holocene Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Avista Corp (NYSE:AVA), around 0.54% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to AVA.
With a general bullishness amongst the heavyweights, some big names have jumped into Avista Corp (NYSE:AVA) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Avista Corp (NYSE:AVA). Citadel Investment Group had $1.3 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also initiated a $1.1 million position during the quarter. The other funds with brand new AVA positions are Greg Eisner's Engineers Gate Manager, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Avista Corp (NYSE:AVA) but similarly valued. These stocks are Hamilton Lane Incorporated (NASDAQ:HLNE), Companhia Paranaense de Energia - COPEL (NYSE:ELP), Envestnet Inc (NYSE:ENV), and Vertiv Holdings Co (NYSE:VRT). This group of stocks' market caps are similar to AVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HLNE,9,68042,-1 ELP,7,44533,0 ENV,17,74887,-1 VRT,39,540556,4 Average,18,182005,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $145 million in AVA's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia - COPEL (NYSE:ELP) is the least popular one with only 7 bullish hedge fund positions. Avista Corp (NYSE:AVA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately AVA wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AVA investors were disappointed as the stock returned -15.6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.