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Hedge Funds Have Never Been This Bullish On Avanos Medical (AVNS)

Debasis Saha
·5 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Avanos Medical (NYSE:AVNS).

Avanos Medical (NYSE:AVNS) investors should pay attention to an increase in activity from the world's largest hedge funds recently. Avanos Medical (NYSE:AVNS) was in 20 hedge funds' portfolios at the end of September. The all time high for this statistic is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 15 hedge funds in our database with AVNS holdings at the end of June. Our calculations also showed that AVNS isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

To the average investor there are plenty of formulas market participants have at their disposal to size up stocks. A pair of the most useful formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best investment managers can beat their index-focused peers by a superb amount (see the details here).

Jeffrey Bronchick - Cove Street Capital
Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's take a look at the key hedge fund action surrounding Avanos Medical (NYSE:AVNS).

Do Hedge Funds Think AVNS Is A Good Stock To Buy Now?

At Q3's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AVNS over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AVNS A Good Stock To Buy?
Is AVNS A Good Stock To Buy?

Among these funds, Paradice Investment Management held the most valuable stake in Avanos Medical (NYSE:AVNS), which was worth $83.6 million at the end of the third quarter. On the second spot was RGM Capital which amassed $68.3 million worth of shares. Cove Street Capital, D E Shaw, and Balyasny Asset Management 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 Paradice Investment Management allocated the biggest weight to Avanos Medical (NYSE:AVNS), around 6.06% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, earmarking 3.83 percent of its 13F equity portfolio to AVNS.

Now, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Avanos Medical (NYSE:AVNS). Balyasny Asset Management had $6.9 million invested in the company at the end of the quarter. Steven Boyd's Armistice Capital also initiated a $6.5 million position during the quarter. The following funds were also among the new AVNS investors: Noam Gottesman's GLG Partners, Hoon Kim's Quantinno Capital, and Greg Eisner's Engineers Gate Manager.

Let's also examine hedge fund activity in other stocks similar to Avanos Medical (NYSE:AVNS). We will take a look at PMV Pharmaceuticals, Inc. (NASDAQ:PMVP), Korn Ferry (NYSE:KFY), MakeMyTrip Limited (NASDAQ:MMYT), Liberty Latin America Ltd. (NASDAQ:LILA), Ameris Bancorp (NASDAQ:ABCB), Omega Flex, Inc. (NASDAQ:OFLX), and NetScout Systems, Inc. (NASDAQ:NTCT). This group of stocks' market values match AVNS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PMVP,17,548921,17 KFY,21,156083,-7 MMYT,10,28638,0 LILA,17,84071,2 ABCB,13,79345,-4 OFLX,4,5878,0 NTCT,11,103777,-5 Average,13.3,143816,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $200 million in AVNS's case. Korn Ferry (NYSE:KFY) is the most popular stock in this table. On the other hand Omega Flex, Inc. (NASDAQ:OFLX) is the least popular one with only 4 bullish hedge fund positions. Avanos Medical (NYSE:AVNS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVNS is 87.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on AVNS as the stock returned 42.3% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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