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 first 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 4.5 years and analyze what the smart money thinks of Cisco Systems, Inc. (NASDAQ:CSCO) based on that data.
Cisco Systems, Inc. (NASDAQ:CSCO) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. CSCO was in 58 hedge funds’ portfolios at the end of March. There were 68 hedge funds in our database with CSCO holdings at the end of the previous quarter. Our calculations also showed that CSCO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Yacktman of Yacktman Asset Management
At Insider Monkey 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 checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the fresh hedge fund action surrounding Cisco Systems, Inc. (NASDAQ:CSCO).
What have hedge funds been doing with Cisco Systems, Inc. (NASDAQ:CSCO)?
At the end of the first quarter, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the fourth quarter of 2019. On the other hand, there were a total of 45 hedge funds with a bullish position in CSCO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Cisco Systems, Inc. (NASDAQ:CSCO), with a stake worth $824.3 million reported as of the end of September. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $318.4 million. Adage Capital Management, Yacktman Asset Management, 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 Heathbridge Capital Management allocated the biggest weight to Cisco Systems, Inc. (NASDAQ:CSCO), around 6.82% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, setting aside 3.64 percent of its 13F equity portfolio to CSCO.
Because Cisco Systems, Inc. (NASDAQ:CSCO) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies who sold off their positions entirely heading into Q4. At the top of the heap, Renaissance Technologies dropped the biggest position of all the hedgies watched by Insider Monkey, comprising close to $81.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $32.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 10 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cisco Systems, Inc. (NASDAQ:CSCO) but similarly valued. These stocks are Netflix, Inc. (NASDAQ:NFLX), NVIDIA Corporation (NASDAQ:NVDA), Exxon Mobil Corporation (NYSE:XOM), and Comcast Corporation (NASDAQ:CMCSA). This group of stocks’ market valuations match CSCO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFLX | 109 | 13648064 | -5 |
| NVDA | 95 | 4127764 | 16 |
| XOM | 65 | 1295305 | 2 |
| CMCSA | 83 | 5538665 | -4 |
| Average | 88 | 6152450 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 88 hedge funds with bullish positions and the average amount invested in these stocks was $6152 million. That figure was $2532 million in CSCO’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Exxon Mobil Corporation (NYSE:XOM) is the least popular one with only 65 bullish hedge fund positions. Compared to these stocks Cisco Systems, Inc. (NASDAQ:CSCO) is even less popular than XOM. 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 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on CSCO, though not to the same extent, as the stock returned 15.3% during the second quarter (through May 22nd) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
