We at Insider Monkey have gone over 738 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Allison Transmission Holdings Inc (NYSE:ALSN) based on that data.
Allison Transmission Holdings Inc (NYSE:ALSN) investors should be aware of an increase in hedge fund sentiment lately. Our calculations also showed that alsn isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]
Let's take a peek at the fresh hedge fund action regarding Allison Transmission Holdings Inc (NYSE:ALSN).
How are hedge funds trading Allison Transmission Holdings Inc (NYSE:ALSN)?
Heading into the second quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in ALSN over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Ashe Capital was the largest shareholder of Allison Transmission Holdings Inc (NYSE:ALSN), with a stake worth $450.5 million reported as of the end of March. Trailing Ashe Capital was SQ Advisors, which amassed a stake valued at $170.3 million. D E Shaw, Renaissance Technologies, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Allison Transmission Holdings Inc (NYSE:ALSN). Point72 Asset Management had $5.5 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $3.6 million investment in the stock during the quarter. The following funds were also among the new ALSN investors: Matthew Hulsizer's PEAK6 Capital Management, Mike Vranos's Ellington, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Allison Transmission Holdings Inc (NYSE:ALSN) but similarly valued. These stocks are New Relic Inc (NYSE:NEWR), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Insulet Corporation (NASDAQ:PODD), and Cable One Inc (NYSE:CABO). This group of stocks' market caps are similar to ALSN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEWR,27,379238,-1 KNX,33,385562,7 PODD,20,245751,-2 CABO,18,524921,3 Average,24.5,383868,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $1170 million in ALSN's case. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 18 bullish hedge fund positions. Allison Transmission Holdings Inc (NYSE:ALSN) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ALSN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ALSN were disappointed as the stock returned -5.4% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.