Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
AVX Corporation (NYSE:AVX) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of December. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Canada Goose Holdings Inc. (NYSE:GOOS), Five9 Inc (NASDAQ:FIVN), and Navistar International Corp (NYSE:NAV) to gather more data points.
Today there are plenty of indicators stock traders can use to analyze their stock investments. Some of the most innovative indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outpace the market by a significant margin (see the details here).
Let's view the recent hedge fund action encompassing AVX Corporation (NYSE:AVX).
Hedge fund activity in AVX Corporation (NYSE:AVX)
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in AVX a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AVX Corporation (NYSE:AVX) was held by Royce & Associates, which reported holding $88.8 million worth of stock at the end of September. It was followed by Sensato Capital Management with a $9.2 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and Renaissance Technologies.
Since AVX Corporation (NYSE:AVX) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who were dropping their entire stakes in the third quarter. Intriguingly, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dumped the biggest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $0.3 million in stock. Alec Litowitz and Ross Laser's fund, Magnetar Capital, also dumped its stock, about $0.3 million worth. These moves are important to note, as total 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 AVX Corporation (NYSE:AVX). We will take a look at Canada Goose Holdings Inc. (NYSE:GOOS), Five9 Inc (NASDAQ:FIVN), Navistar International Corp (NYSE:NAV), and Texas Capital Bancshares Inc (NASDAQ:TCBI). This group of stocks' market caps resemble AVX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOOS,29,174702,11 FIVN,28,469162,3 NAV,20,1055321,-6 TCBI,26,241493,4 Average,25.75,485170,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $120 million in AVX's case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand Navistar International Corp (NYSE:NAV) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks AVX Corporation (NYSE:AVX) is even less popular than NAV. Hedge funds dodged a bullet by taking a bearish stance towards AVX. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AVX wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); AVX investors were disappointed as the stock returned 13.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.