The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and filed their 13F filings for the fourth quarter, during which their equity positions were announced as of December 31st. We looked through these filings, typos, and other major errors and noted the changes in the hedge fund portfolios. Our full review of these public filings is finally complete. This article is intended to raise the smart money sentiment towards Avalara, Inc. (NYSE:AVLR).
Is AVLR stock a buy or a sell? Avalara, Inc. (NYSE:AVLR) was in 56 hedge fund portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic is 48, which means the bullish number of hedge fund positions in this stock is currently at its all-time high. AVLR investors should watch out for an increase in the activity of the world’s largest hedge funds in recent months. At the end of the third quarter, there were 46 hedge funds in our database with AVLR positions. Our calculations have also shown that AVLR is not one of them 30 Most Popular Stocks Among Hedge Funds (Click here for the Q4 ranking).
In the financial world, investors have a variety of tools available to value stocks. A couple of the most widely used instruments are hedge fund and insider trading indicators. We have shown that those who follow the top picks of the best fund managers have historically outperformed the broader indices by a solid amount. Insider Monkey’s monthly stock picking has returned 197% since March 2017, outperforming the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (Details can be found here). Because of this, we believe that sentiment in hedge funds is a useful indicator to watch out for.
Tim Woolley from Polar Capital
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Do Hedge Funds Think AVLR is a Good Stock to Buy Now?
At the end of the fourth quarter, a total of 56 hedge funds tracked by Insider Monkey were long in this stock, up 22% from Q3 2020. Below is the change in hedge fund sentiment towards AVLR over the past 22 quarters. As the hedgie’s capital changes hands, there is a select group of key hedge fund managers who have significantly increased their holdings (or have already accumulated large positions).
Among those funds, Alkeon Capital Management held the most valuable stake in Avalara, Inc. (NYSE: AVLR), valued at $ 433.5 million at the end of the fourth quarter. In second place was Tensile Capital, which amassed $ 210.3 million in shares. Renaissance Technologies, SQN Investors, and Polar Capital were also very fond of the stock, and became one of the company’s largest hedge fund owners. In relation to the portfolio weights assigned to each position Train capital Avalara, Inc. (NYSE: AVLR) received the largest weight, approximately 24.68% of its 13F portfolio. Ivy Lane Capital is also relatively bullish on the stock, spending 14.15 percent of its 13F stock portfolio to AVLR.
As a result, some big names have driven this upward trend. Anomaly capital management, managed by Ben Jacobs, initiated the largest position in Avalara, Inc. (NYSE: AVLR). Anomaly Capital Management had invested $ 25.5 million in the company at the end of the quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital also invested $ 22.5 million in the stock during the quarter. The following funds were also among the new AVLR investors: Philip Timons Owls Nest Partners, Robert W. Koehns Ivy Lane Capital and Joe Magyers Lakehouse Capital.
Let’s also examine hedge fund activity in other stocks similar to Avalara, Inc. (NYSE: AVLR). These stocks are Westinghouse Air Brake Technologies Corporation (NYSE:WAB), Wix.Com Ltd (NASDAQ:WIX), Liberty Global plc (NASDAQ:LBTYA), Black Knight, Inc. (NYSE:BKI), Natura & Co Holding S.A. (NYSE:NTCO), Sunrun Inc (NASDAQ:RUN) and iQIYI, Inc. (NASDAQ:IQ). The market valuations of this group of stocks are similar to AVLR’s market valuation.
[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change of HR position WAB, 45.2348711.7 WIX, 37.999707.1 LBTYA, 36.1123404.1 BKI, 44.994940.3 NTCO 4.82302.0 RUN, 48.3008231.19 IQ, 30.1048707.12 Average, 34.9.1372286.6.1 [/table]
View table here When formatting problems occur.
As you can see, these stocks had an average of 34.9 hedge funds with bullish positions, and the average amount invested in these stocks was $ 1,372 million. That figure was $ 1,314 million in the case of AVLR. Sunrun Inc (NASDAQ:RUN) is the most popular stock in this table. On the other hand, Natura & Co Holding S.A. (NYSE:NTCO) is the least popular with only 4 bullish hedge fund positions. Compared to these stocks, Avalara, Inc. (NYSE: AVLR) is more popular with hedge funds. Our overall hedge fund sentiment score for AVLR is 90. Stocks with a higher number of hedge fund positions compared to other stocks and relative to their historical range receive a higher sentiment score. Our calculations have shown that Top 30 most popular stocks Hedge funds returned 81.2% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% through March 19, 2021, still outperforming the market by 0.8 percentage points. Unfortunately, AVLR wasn’t nearly as popular as those 30 stocks and hedge funds that backed AVLR disappointed, as the stock returned -18.1% and underperformed since the end of the fourth quarter (through March 19) the market. If you’re interested in investing in large-cap stocks with big upside potential, this is what you should check out Top 30 most popular stocks among hedge funds, as most of these stocks have outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider monkey.