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 900 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 Alphabet Inc (NASDAQ:GOOGL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Alphabet Inc (NASDAQ:GOOGL) a healthy stock for your portfolio? Hedge funds were getting more bullish. The number of bullish hedge fund positions inched up by 5 recently. Alphabet Inc (NASDAQ:GOOGL) was in 190 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 185. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GOOGL ranked #4 among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 185 hedge funds in our database with GOOGL holdings at the end of March.
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
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. With all of this in mind let’s check out the recent hedge fund action regarding Alphabet Inc (NASDAQ:GOOGL).
Do Hedge Funds Think GOOGL Is A Good Stock To Buy Now?
At the end of June, a total of 190 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the first quarter of 2020. By comparison, 157 hedge funds held shares or bullish call options in GOOGL a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Alphabet Inc (NASDAQ:GOOGL) was held by Fisher Asset Management, which reported holding $4346.1 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $3702.2 million position. Other investors bullish on the company included TCI Fund Management, Arrowstreet Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Fosse Capital Partners allocated the biggest weight to Alphabet Inc (NASDAQ:GOOGL), around 29.32% of its 13F portfolio. AltaRock Partners is also relatively very bullish on the stock, designating 21.62 percent of its 13F equity portfolio to GOOGL.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Alphabet Inc (NASDAQ:GOOGL) headfirst. Atreides Management, managed by Gavin Baker, assembled the biggest call position in Alphabet Inc (NASDAQ:GOOGL). Atreides Management had $366.3 million invested in the company at the end of the quarter. Farhad Nanji and Michael DeMichele’s MFN Partners also made a $183.1 million investment in the stock during the quarter. The other funds with brand new GOOGL positions are Robert Pohly’s Samlyn Capital, Joseph Samuels’s Islet Management, and Chen Tianqiao’s Shanda Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Alphabet Inc (NASDAQ:GOOGL). These stocks are Facebook Inc (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Alibaba Group Holding Limited (NYSE:BABA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Berkshire Hathaway Inc. (NYSE:BRK-B), JPMorgan Chase & Co. (NYSE:JPM), and Visa Inc (NYSE:V). This group of stocks’ market valuations are similar to GOOGL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FB | 266 | 42349769 | 9 |
| TSLA | 60 | 9296858 | -2 |
| BABA | 146 | 16793500 | 11 |
| TSM | 64 | 10694405 | -12 |
| BRK-B | 116 | 22380662 | 5 |
| JPM | 108 | 4928203 | -3 |
| V | 162 | 27609638 | -2 |
| Average | 131.7 | 19150434 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 131.7 hedge funds with bullish positions and the average amount invested in these stocks was $19150 million. That figure was $26834 million in GOOGL’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 bullish hedge fund positions. Alphabet Inc (NASDAQ:GOOGL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GOOGL is 88.6. 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 24.1% in 2021 through September 20th and still beat the market by 6.9 percentage points. Hedge funds were also right about betting on GOOGL as the stock returned 13.6% since the end of Q2 (through 9/20) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
