The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) was in 76 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 72. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TSM investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 72 hedge funds in our database with TSM holdings at the end of December. Our calculations also showed that TSM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 we’re going to analyze the key hedge fund action regarding Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).
Do Hedge Funds Think TSM Is A Good Stock To Buy Now?
At first quarter’s end, a total of 76 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TSM over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), worth close to $3.151 billion, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is SB Management, led by Masayoshi Son, holding a $1.3205 billion position; the fund has 8.5% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’s AQR Capital Management and Panayotis Takis Sparaggis’s Alkeon Capital Management. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), around 21.43% of its 13F portfolio. SB Management is also relatively very bullish on the stock, setting aside 8.5 percent of its 13F equity portfolio to TSM.
As one would reasonably expect, key hedge funds were breaking ground themselves. Rokos Capital Management, managed by Chris Rokos, established the most valuable position in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). Rokos Capital Management had $158.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $156 million investment in the stock during the quarter. The other funds with new positions in the stock are Stanley Druckenmiller’s Duquesne Capital, Benjamin A. Smith’s Laurion Capital Management, and Edmond M. Safra’s EMS Capital.
Let’s go over hedge fund activity in other stocks similar to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). These stocks are Berkshire Hathaway Inc. (NYSE:BRK-B), JPMorgan Chase & Co. (NYSE:JPM), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), Mastercard Incorporated (NYSE:MA), and UnitedHealth Group Inc. (NYSE:UNH). This group of stocks’ market valuations are similar to TSM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRK-B | 111 | 19880791 | 1 |
| JPM | 111 | 5253689 | -1 |
| V | 164 | 26588103 | -2 |
| JNJ | 81 | 6913373 | 0 |
| WMT | 58 | 5881223 | -12 |
| MA | 151 | 17097200 | -3 |
| UNH | 89 | 12091302 | -2 |
| Average | 109.3 | 13386526 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 109.3 hedge funds with bullish positions and the average amount invested in these stocks was $13387 million. That figure was $10871 million in TSM’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 58 bullish hedge fund positions. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TSM is 47.5. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately TSM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TSM investors were disappointed as the stock returned 0% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Taiwan Semiconductor Mfg Co Ltd (NYSE:TSM)
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Disclosure: None. This article was originally published at Insider Monkey.
