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Do Hedge Funds Love Avnet, Inc. (AVT)?

Reymerlyn Martin

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Avnet, Inc. (NASDAQ:AVT).

Avnet, Inc. (NASDAQ:AVT) shareholders have witnessed an increase in activity from the world's largest hedge funds recently. Our calculations also showed that AVT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are plenty of signals stock traders employ to value their stock investments. Two of the most innovative signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the S&P 500 by a healthy margin (see the details here).

[caption id="attachment_338852" align="aligncenter" width="2480"] Richard S. Pzena of Pzena Investment Management[/caption]

Richard Pzena - Pzena Investment Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the fresh hedge fund action surrounding Avnet, Inc. (NASDAQ:AVT).

Hedge fund activity in Avnet, Inc. (NASDAQ:AVT)

At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the second quarter of 2019. By comparison, 23 hedge funds held shares or bullish call options in AVT a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

AVT_dec2019

Among these funds, Pzena Investment Management held the most valuable stake in Avnet, Inc. (NASDAQ:AVT), which was worth $315.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $118.4 million worth of shares. Diamond Hill Capital, Polaris Capital Management, and Renaissance Technologies 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 Polaris Capital Management allocated the biggest weight to Avnet, Inc. (NASDAQ:AVT), around 2.09% of its portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 1.72 percent of its 13F equity portfolio to AVT.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most valuable position in Avnet, Inc. (NASDAQ:AVT). Arrowstreet Capital had $19.9 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also made a $5.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Paul Marshall and Ian Wace's Marshall Wace, and Renee Yao's Neo Ivy Capital.

Let's check out hedge fund activity in other stocks similar to Avnet, Inc. (NASDAQ:AVT). These stocks are The Wendy's Company (NASDAQ:WEN), Bilibili Inc. (NASDAQ:BILI), Grupo Aeroportuario del Sureste (NYSE:ASR), and Ascendis Pharma A/S (NASDAQ:ASND). This group of stocks' market valuations are similar to AVT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WEN,34,892985,10 BILI,18,383762,-5 ASR,4,38248,-3 ASND,33,2023367,0 Average,22.25,834591,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $835 million. That figure was $678 million in AVT's case. The Wendy's Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (NYSE:ASR) is the least popular one with only 4 bullish hedge fund positions. Avnet, Inc. (NASDAQ:AVT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately AVT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AVT were disappointed as the stock returned -8.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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