Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Qurate Retail, Inc. (NASDAQ:QRTEA), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Qurate Retail, Inc. (NASDAQ:QRTEA) was in 32 hedge funds’ portfolios at the end of September. QRTEA shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 33 hedge funds in our database with QRTEA positions at the end of the previous quarter. Our calculations also showed that QRTEA 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Thomas Bancroft of Makaira Partners
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 analyze the latest hedge fund action surrounding Qurate Retail, Inc. (NASDAQ:QRTEA).
What have hedge funds been doing with Qurate Retail, Inc. (NASDAQ:QRTEA)?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards QRTEA over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, FPR Partners was the largest shareholder of Qurate Retail, Inc. (NASDAQ:QRTEA), with a stake worth $211.5 million reported as of the end of September. Trailing FPR Partners was AQR Capital Management, which amassed a stake valued at $125.6 million. Lyrical Asset Management, International Value Advisers, and Makaira Partners 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 Makaira Partners allocated the biggest weight to Qurate Retail, Inc. (NASDAQ:QRTEA), around 7.74% of its portfolio. FPR Partners is also relatively very bullish on the stock, earmarking 4.83 percent of its 13F equity portfolio to QRTEA.
Seeing as Qurate Retail, Inc. (NASDAQ:QRTEA) has experienced a decline in interest from the smart money, logic holds that there were a few hedgies that slashed their entire stakes heading into Q4. Interestingly, Jim Simons’s Renaissance Technologies dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $18 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $13.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Qurate Retail, Inc. (NASDAQ:QRTEA). We will take a look at The Stars Group Inc. (NASDAQ:TSG), Ritchie Bros. Auctioneers (NYSE:RBA), CIT Group Inc. (NYSE:CIT), and Six Flags Entertainment Corp (NYSE:SIX). This group of stocks’ market caps resemble QRTEA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSG | 34 | 717299 | -4 |
| RBA | 13 | 185553 | 1 |
| CIT | 27 | 810397 | 2 |
| SIX | 37 | 639016 | 7 |
| Average | 27.75 | 588066 | 1.5 |
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 $588 million. That figure was $736 million in QRTEA’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers (NYSE:RBA) is the least popular one with only 13 bullish hedge fund positions. Qurate Retail, Inc. (NASDAQ:QRTEA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately QRTEA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QRTEA were disappointed as the stock returned -8.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
