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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about The Walt Disney Company (NYSE:DIS)?
The Walt Disney Company (NYSE:DIS) was in 102 hedge funds’ portfolios at the end of the first quarter of 2020. DIS has experienced a large decrease in enthusiasm from smart money recently. There were 118 hedge funds in our database with DIS positions at the end of the previous quarter. Our calculations also showed that DIS is still 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.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Matthew Halbower of Pentwater Capital
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 check out this European marijuana stock pitch. We believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the fresh hedge fund action encompassing The Walt Disney Company (NYSE:DIS).
How are hedge funds trading The Walt Disney Company (NYSE:DIS)?
At the end of the first quarter, a total of 102 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DIS over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D1 Capital Partners was the largest shareholder of The Walt Disney Company (NYSE:DIS), with a stake worth $737.1 million reported as of the end of September. Trailing D1 Capital Partners was Eagle Capital Management, which amassed a stake valued at $519.5 million. Fisher Asset Management, Citadel Investment Group, and Yacktman Asset Management 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 Yost Capital Management allocated the biggest weight to The Walt Disney Company (NYSE:DIS), around 12.51% of its 13F portfolio. Atreides Management is also relatively very bullish on the stock, dishing out 7.67 percent of its 13F equity portfolio to DIS.
Due to the fact that The Walt Disney Company (NYSE:DIS) has witnessed declining sentiment from the smart money, we can see that there lies a certain “tier” of money managers who sold off their full holdings heading into Q4. At the top of the heap, Larry Robbins’s Glenview Capital dropped the largest stake of all the hedgies monitored by Insider Monkey, comprising about $302 million in stock. Andrew Immerman and Jeremy Schiffman’s fund, Palestra Capital Management, also cut its stock, about $127.9 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 16 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to The Walt Disney Company (NYSE:DIS). These stocks are Toyota Motor Corporation (NYSE:TM), PepsiCo, Inc. (NASDAQ:PEP), Cisco Systems, Inc. (NASDAQ:CSCO), and Netflix, Inc. (NASDAQ:NFLX). All of these stocks’ market caps resemble DIS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TM | 11 | 206410 | -1 |
| PEP | 57 | 2820020 | -2 |
| CSCO | 58 | 2531778 | -10 |
| NFLX | 109 | 13648064 | -5 |
| Average | 58.75 | 4801568 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 58.75 hedge funds with bullish positions and the average amount invested in these stocks was $4802 million. That figure was $4702 million in DIS’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 11 bullish hedge fund positions. The Walt Disney Company (NYSE:DIS) is not the most popular stock in this group but hedge fund interest is still above average. 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 still beat the market by 15.6 percentage points. Hedge funds were also right about betting on DIS as the stock returned 22.2% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
