After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Autoliv Inc. (NYSE:ALV).
Autoliv Inc. (NYSE:ALV) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of March. At the end of this article we will also compare ALV to other stocks including Planet Fitness Inc (NYSE:PLNT), Donaldson Company, Inc. (NYSE:DCI), and Kirkland Lake Gold Ltd. (NYSE:KL) to get a better sense of its popularity.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to review the new hedge fund action regarding Autoliv Inc. (NYSE:ALV).
How have hedgies been trading Autoliv Inc. (NYSE:ALV)?
At Q1's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ALV a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cevian Capital, managed by Christer Gardell and Lars F÷rberg, holds the biggest position in Autoliv Inc. (NYSE:ALV). Cevian Capital has a $420.9 million position in the stock, comprising 76.3% of its 13F portfolio. On Cevian Capital's heels is Kenneth Squire of 13D Management, with a $6.4 million position; 1.9% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions comprise Jim Simons's Renaissance Technologies, Ed Beddow and William Tichy's Beddow Capital Management and John Overdeck and David Siegel's Two Sigma Advisors.
Since Autoliv Inc. (NYSE:ALV) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of funds that decided to sell off their positions entirely last quarter. Interestingly, Cliff Asness's AQR Capital Management said goodbye to the biggest investment of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $3.7 million in stock, and Ray Dalio's Bridgewater Associates was right behind this move, as the fund dropped about $1.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to Autoliv Inc. (NYSE:ALV). We will take a look at Planet Fitness Inc (NYSE:PLNT), Donaldson Company, Inc. (NYSE:DCI), Kirkland Lake Gold Ltd. (NYSE:KL), and ServiceMaster Global Holdings Inc (NYSE:SERV). All of these stocks' market caps match ALV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLNT,25,498649,-5 DCI,16,121565,-3 KL,25,323351,2 SERV,24,522396,-3 Average,22.5,366490,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $445 million in ALV's case. Planet Fitness Inc (NYSE:PLNT) is the most popular stock in this table. On the other hand Donaldson Company, Inc. (NYSE:DCI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Autoliv Inc. (NYSE:ALV) is even less popular than DCI. Hedge funds dodged a bullet by taking a bearish stance towards ALV. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ALV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ALV investors were disappointed as the stock returned -8.8% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.