Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Sirius XM Holdings Inc (NASDAQ:SIRI) investors should be aware of an increase in hedge fund sentiment of late. Our calculations also showed that SIRI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are over 8000 funds trading today, We choose to focus on the leaders of this club, about 750 funds. It is estimated that this group of investors manage the lion’s share of the smart money’s total capital, and by keeping an eye on their unrivaled equity investments, Insider Monkey has determined a number of investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Warren Buffett of Berkshire Hathaway
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action encompassing Sirius XM Holdings Inc (NASDAQ:SIRI).
What have hedge funds been doing with Sirius XM Holdings Inc (NASDAQ:SIRI)?
Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in SIRI 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.
Among these funds, Berkshire Hathaway held the most valuable stake in Sirius XM Holdings Inc (NASDAQ:SIRI), which was worth $852.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $77.9 million worth of shares. Citadel Investment Group, Zimmer Partners, and Millennium Management 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 Crosslink Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 6.48% of its portfolio. Black-and-White Capital is also relatively very bullish on the stock, setting aside 4.08 percent of its 13F equity portfolio to SIRI.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. KCL Capital, managed by Kevin Cottrell and Chris LaSusa, initiated the most valuable position in Sirius XM Holdings Inc (NASDAQ:SIRI). KCL Capital had $6.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $3.5 million position during the quarter. The other funds with new positions in the stock are Perella Weinberg Partners, Michael Gelband’s ExodusPoint Capital, and Zach Schreiber’s Point State Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sirius XM Holdings Inc (NASDAQ:SIRI) but similarly valued. We will take a look at TransDigm Group Incorporated (NYSE:TDG), Republic Services, Inc. (NYSE:RSG), Chunghwa Telecom Co., Ltd (NYSE:CHT), and Eversource Energy (NYSE:ES). All of these stocks’ market caps match SIRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDG | 56 | 5183262 | 8 |
| RSG | 31 | 625488 | 7 |
| CHT | 5 | 117483 | 2 |
| ES | 19 | 739026 | -2 |
| Average | 27.75 | 1666315 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1666 million. That figure was $1274 million in SIRI’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 bullish hedge fund positions. Sirius XM Holdings Inc (NASDAQ:SIRI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SIRI as the stock returned 11.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
