The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards General Motors Company (NYSE:GM).
Hedge fund interest in General Motors Company (NYSE:GM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that GM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 U.S. Bancorp (NYSE:USB), Automatic Data Processing, Inc. (NASDAQ:ADP), and Crown Castle International Corp. (REIT) (NYSE:CCI) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stanley Druckenmiller of Duquesne Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the recent hedge fund action encompassing General Motors Company (NYSE:GM).
Do Hedge Funds Think GM Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 86 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 69 hedge funds with a bullish position in GM a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of General Motors Company (NYSE:GM), with a stake worth $3550.2 million reported as of the end of June. Trailing Berkshire Hathaway was Eagle Capital Management, which amassed a stake valued at $715.5 million. Greenhaven Associates, Diamond Hill Capital, 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 Greenhaven Associates allocated the biggest weight to General Motors Company (NYSE:GM), around 18.01% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, designating 8.9 percent of its 13F equity portfolio to GM.
Judging by the fact that General Motors Company (NYSE:GM) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedgies who sold off their full holdings heading into Q3. At the top of the heap, Jos Shaver’s Electron Capital Partners cut the largest stake of all the hedgies watched by Insider Monkey, comprising close to $40.2 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $26.9 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to General Motors Company (NYSE:GM). We will take a look at U.S. Bancorp (NYSE:USB), Automatic Data Processing, Inc. (NASDAQ:ADP), Crown Castle International Corp. (REIT) (NYSE:CCI), ConocoPhillips (NYSE:COP), The TJX Companies, Inc. (NYSE:TJX), Cigna Corporation (NYSE:CI), and Enbridge Inc (NYSE:ENB). All of these stocks’ market caps match GM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USB | 41 | 8305634 | -2 |
| ADP | 41 | 3018791 | -1 |
| CCI | 42 | 2093903 | -1 |
| COP | 50 | 1158596 | -1 |
| TJX | 56 | 2387336 | -7 |
| CI | 63 | 2807451 | 10 |
| ENB | 19 | 166071 | -3 |
| Average | 44.6 | 2848255 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.6 hedge funds with bullish positions and the average amount invested in these stocks was $2848 million. That figure was $7415 million in GM’s case. Cigna Corporation (NYSE:CI) is the most popular stock in this table. On the other hand Enbridge Inc (NYSE:ENB) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks General Motors Company (NYSE:GM) is more popular among hedge funds. Our overall hedge fund sentiment score for GM is 84.3. 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 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Unfortunately GM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GM were disappointed as the stock returned -16.6% since the end of the second quarter (through 9/20) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
