Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Activision Blizzard, Inc. (NASDAQ:ATVI) based on that data.
Is Activision Blizzard, Inc. (NASDAQ:ATVI) a first-rate stock to buy now? Hedge funds are in a bullish mood. The number of bullish hedge fund bets inched up by 3 lately. Our calculations also showed that ATVI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Philippe Laffont of Coatue Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s take a look at the latest hedge fund action surrounding Activision Blizzard, Inc. (NASDAQ:ATVI).
What have hedge funds been doing with Activision Blizzard, Inc. (NASDAQ:ATVI)?
Heading into the first quarter of 2020, a total of 76 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ATVI over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Coatue Management held the most valuable stake in Activision Blizzard, Inc. (NASDAQ:ATVI), which was worth $320.7 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $282.5 million worth of shares. Jericho Capital Asset Management, Viking Global, and Alkeon Capital 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 Hidden Lake Asset Management allocated the biggest weight to Activision Blizzard, Inc. (NASDAQ:ATVI), around 29.34% of its 13F portfolio. Jericho Capital Asset Management is also relatively very bullish on the stock, setting aside 15.25 percent of its 13F equity portfolio to ATVI.
As aggregate interest increased, specific money managers have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, initiated the most valuable position in Activision Blizzard, Inc. (NASDAQ:ATVI). Jericho Capital Asset Management had $281.5 million invested in the company at the end of the quarter. Michael Rockefeller and Karl Kroeker’s Woodline Partners also made a $67.3 million investment in the stock during the quarter. The following funds were also among the new ATVI investors: Glen Kacher’s Light Street Capital, George Soros’s Soros Fund Management, and Gavin Baker’s Atreides Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Activision Blizzard, Inc. (NASDAQ:ATVI) but similarly valued. These stocks are Banco Santander (Brasil) SA (NYSE:BSBR), Moody’s Corporation (NYSE:MCO), American International Group Inc (NYSE:AIG), and Exelon Corporation (NYSE:EXC). All of these stocks’ market caps are similar to ATVI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSBR | 8 | 91437 | -7 |
| MCO | 49 | 9218123 | -6 |
| AIG | 52 | 2870459 | -1 |
| EXC | 36 | 1822287 | -2 |
| Average | 36.25 | 3500577 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $3501 million. That figure was $2811 million in ATVI’s case. American International Group Inc (NYSE:AIG) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Activision Blizzard, Inc. (NASDAQ:ATVI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on ATVI as the stock returned 2% so far in Q1 (through March 2nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
