Is Avalara, Inc. (NYSE:AVLR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Avalara, Inc. (NYSE:AVLR) investors should be aware of an increase in hedge fund interest in recent months. Our calculations also showed that AVLR isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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 gander at the recent hedge fund action surrounding Avalara, Inc. (NYSE:AVLR).

What does smart money think about Avalara, Inc. (NYSE:AVLR)?

At Q2's end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 48% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AVLR over the last 16 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the most valuable position in Avalara, Inc. (NYSE:AVLR). Alkeon Capital Management has a $239.4 million position in the stock, comprising 0.9% of its 13F portfolio. The second largest stake is held by Whale Rock Capital Management, led by Alex Sacerdote, holding a $203 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Edward Gilhuly and Scott Stuart's Sageview Capital, Renaissance Technologies and Douglas Dossey and Arthur Young's Tensile Capital.