Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Motorola Solutions Inc (NYSE:MSI).
Motorola Solutions Inc (NYSE:MSI) investors should pay attention to an increase in hedge fund interest recently. Motorola Solutions Inc (NYSE:MSI) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistic is 41. There were 29 hedge funds in our database with MSI positions at the end of the first quarter. Our calculations also showed that MSI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the eyes of most investors, hedge funds are perceived as worthless, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the leaders of this group, about 850 funds. These money managers shepherd bulk of the hedge fund industry’s total asset base, and by tailing their best equity investments, Insider Monkey has figured out many investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
William Gray of Orbis Investment Management
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Do Hedge Funds Think MSI Is A Good Stock To Buy Now?
At Q2’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSI over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, William B. Gray’s Orbis Investment Management has the most valuable position in Motorola Solutions Inc (NYSE:MSI), worth close to $543.6 million, accounting for 3.4% of its total 13F portfolio. The second largest stake is held by Holocene Advisors, led by Brandon Haley, holding a $244 million position; 1.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions include Ken Griffin’s Citadel Investment Group, Noam Gottesman’s GLG Partners and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Orbis Investment Management allocated the biggest weight to Motorola Solutions Inc (NYSE:MSI), around 3.44% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, earmarking 1.38 percent of its 13F equity portfolio to MSI.
Now, specific money managers have jumped into Motorola Solutions Inc (NYSE:MSI) headfirst. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), assembled the largest position in Motorola Solutions Inc (NYSE:MSI). Schonfeld Strategic Advisors had $20 million invested in the company at the end of the quarter. Leon Shaulov’s Maplelane Capital also initiated a $15.6 million position during the quarter. The other funds with new positions in the stock are Ray Dalio’s Bridgewater Associates, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. We will take a look at Barrick Gold Corporation (NYSE:GOLD), Cognizant Technology Solutions Corp (NASDAQ:CTSH), AFLAC Incorporated (NYSE:AFL), HP Inc. (NYSE:HPQ), Palo Alto Networks Inc (NYSE:PANW), Mizuho Financial Group Inc. (NYSE:MFG), and Suncor Energy Inc. (NYSE:SU). All of these stocks’ market caps resemble MSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOLD | 47 | 1234897 | -2 |
| CTSH | 41 | 2996454 | 8 |
| AFL | 33 | 268048 | -3 |
| HPQ | 39 | 1276740 | -4 |
| PANW | 69 | 4720641 | 5 |
| MFG | 6 | 15041 | 1 |
| SU | 32 | 1115960 | -1 |
| Average | 38.1 | 1661112 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1661 million. That figure was $1469 million in MSI’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MSI is 61.7. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on MSI as the stock returned 9% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.
Follow Motorola Solutions Inc. (NYSE:MSI)
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Disclosure: None. This article was originally published at Insider Monkey.
