Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Sony Corporation (ADR) (NYSE:SNE).
Is Sony Corporation (ADR) (NYSE:SNE) ready to rally soon? Hedge funds are getting more optimistic. The number of long hedge fund bets inched up by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Anadarko Petroleum Corporation (NYSE:APC), China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU), and Estee Lauder Companies Inc (NYSE:EL) to gather more data points.
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In the financial world there are many methods stock market investors employ to size up their holdings. Some of the best methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform the broader indices by a healthy margin (see the details here).
With all of this in mind, let’s analyze the latest action encompassing Sony Corporation (ADR) (NYSE:SNE).
Hedge fund activity in Sony Corporation (ADR) (NYSE:SNE)
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the most valuable position in Sony Corporation (ADR) (NYSE:SNE), worth close to $148.6 million, amounting to 1% of its total 13F portfolio. The second largest stake is held by Arlington Value Capital, managed by Allan Mecham and Ben Raybould, which holds a $54.2 million position; the fund has 7.3% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Jim Simons’s Renaissance Technologies, Joe DiMenna’s ZWEIG DIMENNA PARTNERS and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. The aforementioned Arlington Value Capital initiated the biggest position in Sony Corporation (ADR) (NYSE:SNE), while James Dinan’s York Capital Management also initiated a $5.8 million position during the quarter. The other funds with brand new SNE positions are David Stemerman’s Conatus Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Jacob Gottlieb’s Visium Asset Management.
Let’s check out hedge fund activity in other stocks similar to Sony Corporation (ADR) (NYSE:SNE). These stocks are Anadarko Petroleum Corporation (NYSE:APC), China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU), Estee Lauder Companies Inc (NYSE:EL), and Manulife Financial Corporation (USA) (NYSE:MFC). This group of stocks’ market caps resemble SNE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APC | 70 | 3382512 | -5 |
| CHU | 9 | 33921 | 1 |
| EL | 27 | 466256 | -4 |
| MFC | 16 | 245006 | 1 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1.03 billion, as compared to $328 million in SNE’s case. Anadarko Petroleum Corporation (NYSE:APC) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) is the least popular one with only 9 bullish hedge fund positions. Sony Corporation (ADR) (NYSE:SNE) 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. In this regard APC might be a better candidate to consider a long position.
