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Where Do Hedge Funds Stand On AutoWeb, Inc. (AUTO)?

We at Insider Monkey have gone over 817 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 September 30th. In this article, we look at what those funds think of AutoWeb, Inc. (NASDAQ:AUTO) based on that data.

AutoWeb, Inc. (NASDAQ:AUTO) has experienced an increase in enthusiasm from smart money lately. AutoWeb, Inc. (NASDAQ:AUTO) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. Our calculations also showed that AUTO isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to take a glance at the key hedge fund action surrounding AutoWeb, Inc. (NASDAQ:AUTO).

What have hedge funds been doing with AutoWeb, Inc. (NASDAQ:AUTO)?

At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AUTO over the last 21 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

The largest stake in AutoWeb, Inc. (NASDAQ:AUTO) was held by Renaissance Technologies, which reported holding $2 million worth of stock at the end of September. It was followed by Millennium Management with a $0.4 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.

Consequently, some big names have jumped into AutoWeb, Inc. (NASDAQ:AUTO) headfirst. Millennium Management, managed by Israel Englander, created the most outsized position in AutoWeb, Inc. (NASDAQ:AUTO). Millennium Management had $0.4 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0 million position during the quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as AutoWeb, Inc. (NASDAQ:AUTO) but similarly valued. We will take a look at Friedman Industries, Incorporated (NYSE:FRD), Dawson Geophysical Company (NASDAQ:DWSN), First US Bancshares, Inc. (NASDAQ:FUSB), PainReform Ltd. (NASDAQ:PRFX), Atlantic American Corporation (NASDAQ:AAME), Pulmatrix, Inc. (NASDAQ:PULM), and Borqs Technologies, Inc. (NASDAQ:BRQS). This group of stocks' market values are similar to AUTO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRD,1,3012,0 DWSN,6,3946,0 FUSB,2,2227,0 PRFX,2,4986,2 AAME,1,111,0 PULM,5,4678,3 BRQS,1,274,-2 Average,2.6,2748,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in AUTO's case. Dawson Geophysical Company (NASDAQ:DWSN) is the most popular stock in this table. On the other hand Friedman Industries, Incorporated (NYSE:FRD) is the least popular one with only 1 bullish hedge fund positions. AutoWeb, Inc. (NASDAQ:AUTO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AUTO is 34.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and beat the market again by 15.4 percentage points. Unfortunately AUTO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on AUTO were disappointed as the stock returned -18.2% since the end of September (through 11/23) 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 many of these stocks already outperformed the market so far this year.

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

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