Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Motorola Solutions Inc (NYSE:MSI) changed recently.
Motorola Solutions Inc (NYSE:MSI) was in 29 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. MSI shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 35 hedge funds in our database with MSI holdings at the end of December. Our calculations also showed that MSI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
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. Keeping this in mind we’re going to check out the fresh hedge fund action surrounding Motorola Solutions Inc (NYSE:MSI).
Do Hedge Funds Think MSI Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2020. By comparison, 34 hedge funds held shares or bullish call options in MSI a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, William B. Gray’s Orbis Investment Management has the most valuable position in Motorola Solutions Inc (NYSE:MSI), worth close to $466 million, comprising 3.3% of its total 13F portfolio. The second most bullish fund manager is Holocene Advisors, managed by Brandon Haley, which holds a $129.7 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain D. E. Shaw’s D E Shaw, Richard Mashaal’s Rima Senvest Management 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 3.33% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, setting aside 1.63 percent of its 13F equity portfolio to MSI.
Since Motorola Solutions Inc (NYSE:MSI) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group said goodbye to the largest investment of the 750 funds watched by Insider Monkey, comprising about $12.7 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund cut about $7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds last quarter.
Let’s now take a look at 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 Republic Services, Inc. (NYSE:RSG), Companhia Paranaense de Energia (NYSE:ELP), ArcelorMittal (NYSE:MT), Palo Alto Networks Inc (NYSE:PANW), V.F. Corporation (NYSE:VFC), NatWest Group plc (NYSE:NWG), and McKesson Corporation (NYSE:MCK). This group of stocks’ market valuations are closest to MSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RSG | 36 | 1073744 | 0 |
| ELP | 5 | 36122 | -4 |
| MT | 21 | 709788 | 3 |
| PANW | 64 | 4015196 | 3 |
| VFC | 31 | 1109135 | 0 |
| NWG | 6 | 4359 | 3 |
| MCK | 51 | 2123043 | 0 |
| Average | 30.6 | 1295912 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1296 million. That figure was $1001 million in MSI’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia (NYSE:ELP) is the least popular one with only 5 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 40.6. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. A small number of hedge funds were also right about betting on MSI as the stock returned 17.9% since the end of the first quarter (through 7/2) 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.
