The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Motorola Solutions Inc (NYSE:MSI) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Motorola Solutions Inc (NYSE:MSI) has experienced an increase in hedge fund interest of late. Motorola Solutions Inc (NYSE:MSI) was in 36 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 41. There were 34 hedge funds in our database with MSI holdings at the end of March. Our calculations also showed that MSI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a peek at the key hedge fund action regarding Motorola Solutions Inc (NYSE:MSI).
Hedge fund activity in Motorola Solutions Inc (NYSE:MSI)
At second quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MSI over the last 20 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Motorola Solutions Inc (NYSE:MSI), which was worth $113.4 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $86.9 million worth of shares. Two Sigma Advisors, Adage Capital Management, and Arrowstreet Capital 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 MIG Capital allocated the biggest weight to Motorola Solutions Inc (NYSE:MSI), around 2.52% of its 13F portfolio. Oribel Capital Management is also relatively very bullish on the stock, earmarking 0.89 percent of its 13F equity portfolio to MSI.
As one would reasonably expect, some big names were breaking ground themselves. Orbis Investment Management, managed by William B. Gray, created the most valuable position in Motorola Solutions Inc (NYSE:MSI). Orbis Investment Management had $86.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $40 million position during the quarter. The other funds with brand new MSI positions are Brandon Haley’s Holocene Advisors, Mikal Patel’s Oribel Capital Management, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.
Let’s now review hedge fund activity in other stocks similar to Motorola Solutions Inc (NYSE:MSI). These stocks are V.F. Corporation (NYSE:VFC), Parker-Hannifin Corporation (NYSE:PH), Twitter Inc (NYSE:TWTR), Marvell Technology Group Ltd. (NASDAQ:MRVL), American Water Works Company, Inc. (NYSE:AWK), XP Inc. (NASDAQ:XP), and Williams Companies, Inc. (NYSE:WMB). This group of stocks’ market values are closest to MSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VFC | 27 | 558958 | 8 |
| PH | 39 | 1172205 | 7 |
| TWTR | 68 | 1278023 | 13 |
| MRVL | 41 | 664690 | 12 |
| AWK | 30 | 653000 | 0 |
| XP | 21 | 430821 | 8 |
| WMB | 41 | 466723 | -6 |
| Average | 38.1 | 746346 | 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 $746 million. That figure was $536 million in MSI’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand XP Inc. (NASDAQ:XP) is the least popular one with only 21 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 49.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately MSI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MSI investors were disappointed as the stock returned 10.4% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
