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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Ambev SA (NYSE:ABEV).
Ambev SA (NYSE:ABEV) investors should pay attention to a decrease in support from the world's most elite money managers recently. ABEV was in 9 hedge funds' portfolios at the end of March. There were 14 hedge funds in our database with ABEV positions at the end of the previous quarter. Our calculations also showed that ABEV 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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_844243" align="aligncenter" width="400"] Donald Sussman of Paloma Partners[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the top 15 defense contractors in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to analyze the new hedge fund action encompassing Ambev SA (NYSE:ABEV).
What have hedge funds been doing with Ambev SA (NYSE:ABEV)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in ABEV a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Ambev SA (NYSE:ABEV). Renaissance Technologies has a $110.3 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Nicolai Tangen of Ako Capital, with a $108.3 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of D. E. Shaw's D E Shaw, John Overdeck and David Siegel's Two Sigma Advisors and David Kowitz and Sheldon Kasowitz's Indus Capital. In terms of the portfolio weights assigned to each position Ako Capital allocated the biggest weight to Ambev SA (NYSE:ABEV), around 2.28% of its 13F portfolio. Dalton Investments is also relatively very bullish on the stock, setting aside 1.08 percent of its 13F equity portfolio to ABEV.
Because Ambev SA (NYSE:ABEV) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who sold off their full holdings by the end of the first quarter. Interestingly, Ken Fisher's Fisher Asset Management dropped the largest stake of the "upper crust" of funds tracked by Insider Monkey, valued at close to $89.9 million in stock. Noam Gottesman's fund, GLG Partners, also cut its stock, about $3.7 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ambev SA (NYSE:ABEV) but similarly valued. We will take a look at Digital Realty Trust, Inc. (NYSE:DLR), Eni SpA (NYSE:E), Exelon Corporation (NYSE:EXC), and Koninklijke Philips NV (NYSE:PHG). This group of stocks' market caps are similar to ABEV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DLR,29,302894,3 E,5,35398,-1 EXC,33,1129634,-3 PHG,11,138924,2 Average,19.5,401713,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $402 million. That figure was $254 million in ABEV's case. Exelon Corporation (NYSE:EXC) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 5 bullish hedge fund positions. Ambev SA (NYSE:ABEV) 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 ABEV wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ABEV investors were disappointed as the stock returned 17.8% 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.