Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards VMware, Inc. (NYSE:VMW) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is VMware, Inc. (NYSE:VMW) an exceptional stock to buy now? The smart money was turning bullish. The number of bullish hedge fund positions increased by 3 recently. VMware, Inc. (NYSE:VMW) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that VMW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s view the fresh hedge fund action regarding VMware, Inc. (NYSE:VMW).
John Overdeck of Two Sigma Advisors
Do Hedge Funds Think VMW Is A Good Stock To Buy Now?
At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in VMW a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of VMware, Inc. (NYSE:VMW), with a stake worth $303.3 million reported as of the end of September. Trailing Citadel Investment Group was Two Sigma Advisors, which amassed a stake valued at $196.4 million. Citadel Investment Group, Marshall Wace LLP, and Antara Capital 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 Ursa Fund Management allocated the biggest weight to VMware, Inc. (NYSE:VMW), around 4.93% of its 13F portfolio. Antara Capital is also relatively very bullish on the stock, setting aside 2.28 percent of its 13F equity portfolio to VMW.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, established the most outsized position in VMware, Inc. (NYSE:VMW). Islet Management had $22.3 million invested in the company at the end of the quarter. Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors also initiated a $22.1 million position during the quarter. The other funds with brand new VMW positions are Andrew Hahn’s Ursa Fund Management, Andrew Weiss’s Weiss Asset Management, and Stephen Mildenhall’s Contrarius Investment Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as VMware, Inc. (NYSE:VMW) but similarly valued. These stocks are Workday Inc (NASDAQ:WDAY), Boston Scientific Corporation (NYSE:BSX), Activision Blizzard, Inc. (NASDAQ:ATVI), Stellantis N.V. (NYSE:STLA), Ecolab Inc. (NYSE:ECL), Eaton Corporation plc (NYSE:ETN), and Norfolk Southern Corp. (NYSE:NSC). This group of stocks’ market caps match VMW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WDAY | 72 | 6389641 | 0 |
| BSX | 47 | 3051321 | -4 |
| ATVI | 80 | 4284643 | 2 |
| STLA | 24 | 1178890 | -4 |
| ECL | 39 | 2551887 | -9 |
| ETN | 45 | 1089775 | 5 |
| NSC | 46 | 1049404 | -12 |
| Average | 50.4 | 2799366 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.4 hedge funds with bullish positions and the average amount invested in these stocks was $2799 million. That figure was $619 million in VMW’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Stellantis N.V. (NYSE:STLA) is the least popular one with only 24 bullish hedge fund positions. VMware, Inc. (NYSE:VMW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VMW is 35.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on VMW as the stock returned 5.3% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Vmware Llc (NYSE:VMW)
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Disclosure: None. This article was originally published at Insider Monkey.
