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Hedge Funds Are Selling Atlantica Yield plc (AY)

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The financial regulations require hedge funds and wealthy investors that crossed 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 June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Atlantica Yield plc (NASDAQ:AY) based on those filings.

Atlantica Yield plc (NASDAQ:AY) was in 18 hedge funds' portfolios at the end of June. AY shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. There were 21 hedge funds in our database with AY holdings at the end of the previous quarter. Our calculations also showed that AY isn't among the 30 most popular stocks among hedge funds (see the video below).

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are dozens of formulas market participants have at their disposal to appraise their holdings. Two of the less known formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best fund managers can trounce the market by a superb margin (see the details here).

AY_oct2019
AY_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the key hedge fund action surrounding Atlantica Yield plc (NASDAQ:AY).

What does smart money think about Atlantica Yield plc (NASDAQ:AY)?

At Q2's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AY over the last 16 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Philip Hempleman Ardsley Partners
Philip Hempleman Ardsley Partners

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michel Massoud's Melqart Asset Management has the number one position in Atlantica Yield plc (NASDAQ:AY), worth close to $33.4 million, amounting to 2.3% of its total 13F portfolio. On Melqart Asset Management's heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $30.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Matthew Barrett's Glendon Capital Management, Noam Gottesman's GLG Partners and Philip Hempleman's Ardsley Partners.

Due to the fact that Atlantica Yield plc (NASDAQ:AY) has witnessed a decline in interest from the smart money, logic holds that there exists a select few fund managers who sold off their positions entirely in the second quarter. It's worth mentioning that Phill Gross and Robert Atchinson's Adage Capital Management dumped the largest stake of the 750 funds followed by Insider Monkey, worth an estimated $21.8 million in stock, and Mark T. Gallogly's Centerbridge Partners was right behind this move, as the fund dropped about $13.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds in the second quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Atlantica Yield plc (NASDAQ:AY) but similarly valued. These stocks are Power Integrations Inc (NASDAQ:POWI), PDC Energy Inc (NASDAQ:PDCE), Penn National Gaming, Inc (NASDAQ:PENN), and CommVault Systems, Inc. (NASDAQ:CVLT). All of these stocks' market caps are similar to AY's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position POWI,9,83455,3 PDCE,14,258405,0 PENN,20,269168,-4 CVLT,19,277035,-10 Average,15.5,222016,-2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $203 million in AY's case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand Power Integrations Inc (NASDAQ:POWI) is the least popular one with only 9 bullish hedge fund positions. Atlantica Yield plc (NASDAQ:AY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on AY as the stock returned 8.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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