Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we publish an article with the title “Recession is Imminent: We Need A Travel Ban NOW”. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
Is DISH Network Corp. (NASDAQ:DISH) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
DISH Network Corp. (NASDAQ:DISH) has experienced an increase in support from the world’s most elite money managers recently. Our calculations also showed that DISH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. 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 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Boykin Curry of Eagle Capital
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 review the recent hedge fund action encompassing DISH Network Corp. (NASDAQ:DISH).
What have hedge funds been doing with DISH Network Corp. (NASDAQ:DISH)?
Heading into the first quarter of 2020, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards DISH over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in DISH Network Corp. (NASDAQ:DISH) was held by King Street Capital, which reported holding $459.8 million worth of stock at the end of September. It was followed by Eagle Capital Management with a $343.8 million position. Other investors bullish on the company included Paulson & Co, Key Square Capital Management, and GAMCO Investors. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to DISH Network Corp. (NASDAQ:DISH), around 33.72% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, designating 22.69 percent of its 13F equity portfolio to DISH.
As industrywide interest jumped, key money managers have jumped into DISH Network Corp. (NASDAQ:DISH) headfirst. Duquesne Capital, managed by Stanley Druckenmiller, initiated the largest position in DISH Network Corp. (NASDAQ:DISH). Duquesne Capital had $34.3 million invested in the company at the end of the quarter. John Petry’s Sessa Capital also made a $32.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Stuart J. Zimmer’s Zimmer Partners, Dmitry Balyasny’s Balyasny Asset Management, and Clint Carlson’s Carlson Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as DISH Network Corp. (NASDAQ:DISH) but similarly valued. We will take a look at Garmin Ltd. (NASDAQ:GRMN), Fortinet Inc (NASDAQ:FTNT), ZTO Express (Cayman) Inc. (NYSE:ZTO), and W.W. Grainger, Inc. (NYSE:GWW). This group of stocks’ market values are closest to DISH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRMN | 26 | 509870 | -4 |
| FTNT | 42 | 1764894 | 1 |
| ZTO | 14 | 497928 | -6 |
| GWW | 29 | 700506 | 4 |
| Average | 27.75 | 868300 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $868 million. That figure was $1618 million in DISH’s case. Fortinet Inc (NASDAQ:FTNT) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 14 bullish hedge fund positions. DISH Network Corp. (NASDAQ:DISH) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 lost 12.9% in 2020 through March 9th but beat the market by 1.9 percentage points. Unfortunately DISH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DISH were disappointed as the stock returned -29.7% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
