Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Sirius XM Holdings Inc (NASDAQ:SIRI) based on that data and determine whether they were really smart about the stock.
Is Sirius XM Holdings Inc (NASDAQ:SIRI) a buy, sell, or hold? Investors who are in the know were in an optimistic mood. The number of bullish hedge fund positions improved by 6 in recent months. Sirius XM Holdings Inc (NASDAQ:SIRI) was in 42 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SIRI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now let’s take a peek at the new hedge fund action surrounding Sirius XM Holdings Inc (NASDAQ:SIRI).
Hedge fund activity in Sirius XM Holdings Inc (NASDAQ:SIRI)
At the end of the second quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the first quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in SIRI a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in Sirius XM Holdings Inc (NASDAQ:SIRI), which was worth $293.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $285.8 million worth of shares. Renaissance Technologies, Arrowstreet Capital, and Zimmer 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 DPM Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 0.99% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to SIRI.
Now, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the biggest position in Sirius XM Holdings Inc (NASDAQ:SIRI). Adage Capital Management had $39.8 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $16.3 million position during the quarter. The other funds with brand new SIRI positions are Dmitry Balyasny’s Balyasny Asset Management, George Soros’s Soros Fund Management, and Seymour Sy Kaufman and Michael Stark’s Crosslink Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Sirius XM Holdings Inc (NASDAQ:SIRI). These stocks are Cummins Inc. (NYSE:CMI), Schlumberger Limited. (NYSE:SLB), Johnson Controls International plc (NYSE:JCI), Fresenius Medical Care AG & Co. (NYSE:FMS), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), RingCentral Inc (NYSE:RNG), and PPG Industries, Inc. (NYSE:PPG). This group of stocks’ market valuations resemble SIRI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMI | 38 | 358670 | 4 |
| SLB | 53 | 932470 | 4 |
| JCI | 28 | 1099174 | -9 |
| FMS | 6 | 11727 | -4 |
| WLTW | 49 | 2288145 | 6 |
| RNG | 62 | 3647093 | -5 |
| PPG | 36 | 261423 | 1 |
| Average | 38.9 | 1228386 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $1228 million. That figure was $1137 million in SIRI’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 6 bullish hedge fund positions. Sirius XM Holdings Inc (NASDAQ:SIRI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIRI is 72.1. 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. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately SIRI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SIRI were disappointed as the stock returned 0.2% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
