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. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Verizon Communications Inc. (NYSE:VZ).
Is Verizon Communications Inc. (NYSE:VZ) a superb stock to buy now? Investors who are in the know are buying. The number of long hedge fund positions improved by 1 recently. Our calculations also showed that VZ isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). VZ was in 65 hedge funds’ portfolios at the end of December. There were 64 hedge funds in our database with VZ holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of indicators shareholders can use to size up publicly traded companies. A pair of the less known indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top investment managers can trounce their index-focused peers by a solid margin (see the details here).
Cliff Asness of AQR Capital 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. Now we’re going to view the key hedge fund action encompassing Verizon Communications Inc. (NYSE:VZ).
What have hedge funds been doing with Verizon Communications Inc. (NYSE:VZ)?
At Q4’s end, a total of 65 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. On the other hand, there were a total of 62 hedge funds with a bullish position in VZ a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Verizon Communications Inc. (NYSE:VZ), with a stake worth $373.5 million reported as of the end of September. Trailing AQR Capital Management was D E Shaw, which amassed a stake valued at $312.8 million. Adage Capital Management, Citadel Investment Group, and Citadel Investment Group 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 Callodine Capital Management allocated the biggest weight to Verizon Communications Inc. (NYSE:VZ), around 9.42% of its 13F portfolio. Circle Road Advisors is also relatively very bullish on the stock, earmarking 9.41 percent of its 13F equity portfolio to VZ.
Now, key hedge funds have jumped into Verizon Communications Inc. (NYSE:VZ) headfirst. Levin Easterly Partners, managed by John Murphy, created the largest position in Verizon Communications Inc. (NYSE:VZ). Levin Easterly Partners had $26.7 million invested in the company at the end of the quarter. Jaime Sterne’s Skye Global Management also initiated a $8.2 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Donald Sussman’s Paloma Partners, and Lee Ainslie’s Maverick Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Verizon Communications Inc. (NYSE:VZ) but similarly valued. These stocks are The Home Depot, Inc. (NYSE:HD), The Coca-Cola Company (NYSE:KO), Merck & Co., Inc. (NYSE:MRK), and Chevron Corporation (NYSE:CVX). This group of stocks’ market values are similar to VZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HD | 91 | 4996321 | 21 |
| KO | 51 | 23797078 | -5 |
| MRK | 77 | 5164143 | -3 |
| CVX | 47 | 2391610 | -6 |
| Average | 66.5 | 9087288 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 66.5 hedge funds with bullish positions and the average amount invested in these stocks was $9087 million. That figure was $1885 million in VZ’s case. The Home Depot, Inc. (NYSE:HD) is the most popular stock in this table. On the other hand Chevron Corporation (NYSE:CVX) is the least popular one with only 47 bullish hedge fund positions. Verizon Communications Inc. (NYSE:VZ) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 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. Unfortunately VZ wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VZ investors were disappointed as the stock returned -5.7% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
