According to most stock holders, hedge funds are perceived as slow, old financial tools of years past. While there are more than 8000 funds trading today, We look at the masters of this club, around 700 funds. Most estimates calculate that this group of people handles the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their matchless picks, Insider Monkey has determined several investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Heading into the second quarter of 2016, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 20% from the fourth quarter of 2015. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the largest position in General Motors Company (NYSE:GM), worth close to $1.57 billion, corresponding to 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Greenlight Capital, led by David Einhorn, holding a $480.8 million position; 8.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism encompass Cliff Asness’ AQR Capital Management, Robert Polak’s Anchor Bolt Capital and D. E. Shaw’s D E Shaw.
Seeing as General Motors Company (NYSE:GM) has faced falling interest from the smart money, we can see that there exists a select few fund managers that slashed their full holdings in the fourth quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest stake of all the hedgies watched by Insider Monkey, totaling close to $156.2 million in stock. Frank Brosens’s fund, Taconic Capital, also dumped its stock, about $140.2 million worth. These transactions are interesting, as total hedge fund interest dropped by 17 funds in the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as General Motors Company (NYSE:GM) but similarly valued. We will take a look at Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Kimberly Clark Corp (NYSE:KMB), Metlife Inc (NYSE:MET), and Prudential Public Limited Company (ADR) (NYSE:PUK). This group of stocks’ market values match GM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEVA | 70 | 7337457 | -11 |
| KMB | 31 | 1217828 | 5 |
| MET | 50 | 1620927 | 9 |
| PUK | 12 | 19037 | 7 |
As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2.55 billion. That figure was $3.72 billion in GM’s case. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is the most popular stock in this table. On the other hand Prudential Public Limited Company (ADR) (NYSE:PUK) is the least popular one with only 12 bullish hedge fund positions. General Motors Company (NYSE:GM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TEVA might be a better candidate to consider a long position.
Disclosure: none
