Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published 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.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Sirius XM Holdings Inc (NASDAQ:SIRI).
Is Sirius XM Holdings Inc (NASDAQ:SIRI) the right pick for your portfolio? Prominent investors are becoming less hopeful. The number of long hedge fund bets dropped by 5 recently. Our calculations also showed that SIRI 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.
In the financial world there are tons of metrics shareholders put to use to size up stocks. A couple of the best metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace the market by a significant margin (see the details here).
Clint Carlson of Carlson 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. Keeping this in mind we’re going to check out the new hedge fund action regarding Sirius XM Holdings Inc (NASDAQ:SIRI).
How have hedgies been trading Sirius XM Holdings Inc (NASDAQ:SIRI)?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the third quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in SIRI a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (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 $974.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $221.7 million worth of shares. Citadel Investment Group, Millennium Management, 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 KCL Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 1.44% of its 13F portfolio. Black-and-White Capital is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to SIRI.
Because Sirius XM Holdings Inc (NASDAQ:SIRI) has witnessed a decline in interest from the smart money, logic holds that there were a few money managers that slashed their full holdings in the third quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners cut the largest investment of the 750 funds monitored by Insider Monkey, totaling about $28.1 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also dumped its stock, about $12 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Sirius XM Holdings Inc (NASDAQ:SIRI). These stocks are PPG Industries, Inc. (NYSE:PPG), LyondellBasell Industries NV (NYSE:LYB), Johnson Controls International plc (NYSE:JCI), and Electronic Arts Inc. (NASDAQ:EA). This group of stocks’ market values are closest to SIRI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPG | 35 | 465224 | 5 |
| LYB | 40 | 377389 | 6 |
| JCI | 37 | 1119829 | 13 |
| EA | 68 | 2359890 | -2 |
| Average | 45 | 1080583 | 5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1081 million. That figure was $1431 million in SIRI’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand PPG Industries, Inc. (NYSE:PPG) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Sirius XM Holdings Inc (NASDAQ:SIRI) is even less popular than PPG. Hedge funds dodged a bullet by taking a bearish stance towards SIRI. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but managed to beat the market by 3.1 percentage points. Unfortunately SIRI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SIRI investors were disappointed as the stock returned -15.2% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
