Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Fiserv, Inc. (NASDAQ:FISV).
Fiserv, Inc. (NASDAQ:FISV) investors should be aware of an increase in enthusiasm from smart money lately. FISV was in 47 hedge funds’ portfolios at the end of the first quarter of 2019. There were 29 hedge funds in our database with FISV positions at the end of the previous quarter. Our calculations also showed that fisv isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Boykin Curry of Eagle Capital
We’re going to take a peek at the fresh hedge fund action regarding Fiserv, Inc. (NASDAQ:FISV).
How have hedgies been trading Fiserv, Inc. (NASDAQ:FISV)?
At Q1’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FISV over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, John Armitage’s Egerton Capital Limited has the biggest position in Fiserv, Inc. (NASDAQ:FISV), worth close to $568.1 million, corresponding to 4% of its total 13F portfolio. The second largest stake is held by Maverick Capital, managed by Lee Ainslie, which holds a $283.8 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Michael Lowenstein’s Kensico Capital, Boykin Curry’s Eagle Capital Management and Jim Simons’s Renaissance Technologies.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Egerton Capital Limited, managed by John Armitage, established the largest position in Fiserv, Inc. (NASDAQ:FISV). Egerton Capital Limited had $568.1 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $283.8 million investment in the stock during the quarter. The other funds with brand new FISV positions are Boykin Curry’s Eagle Capital Management, Steve Cohen’s Point72 Asset Management, and James Crichton’s Hitchwood Capital Management.
Let’s check out hedge fund activity in other stocks similar to Fiserv, Inc. (NASDAQ:FISV). These stocks are Sempra Energy (NYSE:SRE), Ross Stores, Inc. (NASDAQ:ROST), Ford Motor Company (NYSE:F), and V.F. Corporation (NYSE:VFC). This group of stocks’ market valuations are closest to FISV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRE | 31 | 2901864 | -3 |
| ROST | 29 | 907288 | -4 |
| F | 33 | 1106452 | 0 |
| VFC | 29 | 1091453 | 2 |
| Average | 30.5 | 1501764 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $1502 million. That figure was $2541 million in FISV’s case. Ford Motor Company (NYSE:F) is the most popular stock in this table. On the other hand Ross Stores, Inc. (NASDAQ:ROST) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Fiserv, Inc. (NASDAQ:FISV) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately FISV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FISV were disappointed as the stock returned -1.3% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
