Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of American Vanguard Corp. (NYSE:AVD) based on that data.
Is American Vanguard Corp. (NYSE:AVD) an exceptional investment now? Money managers are getting more bullish. The number of long hedge fund bets increased by 2 lately. Our calculations also showed that AVD isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
To most investors, hedge funds are viewed as unimportant, old investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the leaders of this club, about 850 funds. These money managers manage the lion's share of the smart money's total asset base, and by following their best investments, Insider Monkey has deciphered several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Jeffrey Bronchick of Cove Street Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the new hedge fund action surrounding American Vanguard Corp. (NYSE:AVD).
How have hedgies been trading American Vanguard Corp. (NYSE:AVD)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AVD over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is AVD A Good Stock To Buy?
More specifically, Cove Street Capital was the largest shareholder of American Vanguard Corp. (NYSE:AVD), with a stake worth $7.1 million reported as of the end of September. Trailing Cove Street Capital was Renaissance Technologies, which amassed a stake valued at $2.7 million. Royce & Associates, Millennium Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to American Vanguard Corp. (NYSE:AVD), around 1.46% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to AVD.
Consequently, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, created the biggest position in American Vanguard Corp. (NYSE:AVD). Millennium Management had $1.8 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new AVD position is Greg Eisner's Engineers Gate Manager.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as American Vanguard Corp. (NYSE:AVD) but similarly valued. We will take a look at MYR Group Inc (NASDAQ:MYRG), Heska Corp (NASDAQ:HSKA), Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), and Cellcom Israel Ltd. (NYSE:CEL). All of these stocks' market caps match AVD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MYRG,10,23804,-2 HSKA,15,50445,2 NLTX,20,197499,0 CEL,1,11104,-1 Average,11.5,70713,-0.25 [/table]
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $16 million in AVD's case. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 1 bullish hedge fund positions. American Vanguard Corp. (NYSE:AVD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately AVD wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AVD investors were disappointed as the stock returned -15.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
