The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Grupo Aval Acciones y Valores S.A. (NYSE:AVAL).
Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) investors should pay attention to a decrease in enthusiasm from smart money lately. AVAL was in 5 hedge funds' portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with AVAL positions at the end of the previous quarter. Our calculations also showed that AVAL 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_373490" align="aligncenter" width="396"] Wall Street Bull[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we're going to take a glance at the new hedge fund action surrounding Grupo Aval Acciones y Valores S.A. (NYSE:AVAL).
How have hedgies been trading Grupo Aval Acciones y Valores S.A. (NYSE:AVAL)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in AVAL a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), worth close to $8.3 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is Thomas Bailard of Bailard Inc, with a $0.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions comprise D. E. Shaw's D E Shaw, John Overdeck and David Siegel's Two Sigma Advisors and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Bailard Inc allocated the biggest weight to Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), around 0.05% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to AVAL.
Judging by the fact that Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that decided to sell off their positions entirely in the first quarter. Interestingly, Israel Englander's Millennium Management sold off the largest investment of all the hedgies watched by Insider Monkey, worth close to $3.8 million in stock, and Ronald Hua's Qtron Investments was right behind this move, as the fund sold off about $0.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Grupo Aval Acciones y Valores S.A. (NYSE:AVAL). We will take a look at SolarWinds Corporation (NYSE:SWI), Hyatt Hotels Corporation (NYSE:H), Casey's General Stores, Inc. (NASDAQ:CASY), and Acceleron Pharma Inc (NASDAQ:XLRN). This group of stocks' market caps are closest to AVAL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWI,14,2141429,-1 H,24,513510,-3 CASY,23,158620,1 XLRN,38,775310,11 Average,24.75,897217,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $897 million. That figure was $10 million in AVAL's case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand SolarWinds Corporation (NYSE:SWI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is even less popular than SWI. Hedge funds dodged a bullet by taking a bearish stance towards AVAL. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately AVAL wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); AVAL investors were disappointed as the stock returned 2% during the second quarter (through the end of May) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.