The 700+ 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 31. 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 Broadcom Inc (NASDAQ:AVGO).
Is Broadcom Inc (NASDAQ:AVGO) a marvelous investment today? The best stock pickers are in a bullish mood. The number of long hedge fund bets rose by 1 in recent months. Our calculations also showed that AVGO isn’t among the 30 most popular stocks among hedge funds. AVGO was in 53 hedge funds’ portfolios at the end of the first quarter of 2019. There were 52 hedge funds in our database with AVGO holdings at the end of the previous quarter.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Glenn Russell Dubin of Highbridge Capital
We’re going to take a gander at the new hedge fund action encompassing Broadcom Inc (NASDAQ:AVGO).
What does the smart money think about Broadcom Inc (NASDAQ:AVGO)?
Heading into the second quarter of 2019, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AVGO over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, First Pacific Advisors LLC was the largest shareholder of Broadcom Inc (NASDAQ:AVGO), with a stake worth $542.3 million reported as of the end of March. Trailing First Pacific Advisors LLC was SRS Investment Management, which amassed a stake valued at $541.4 million. Cantillon Capital Management, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key hedge funds have jumped into Broadcom Inc (NASDAQ:AVGO) headfirst. Holocene Advisors, managed by Brandon Haley, created the largest position in Broadcom Inc (NASDAQ:AVGO). Holocene Advisors had $93.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $63.1 million investment in the stock during the quarter. The following funds were also among the new AVGO investors: Benjamin A. Smith’s Laurion Capital Management, Larry Chen and Terry Zhang’s Tairen Capital, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Broadcom Inc (NASDAQ:AVGO) but similarly valued. We will take a look at Union Pacific Corporation (NYSE:UNP), Amgen, Inc. (NASDAQ:AMGN), Honeywell International Inc. (NYSE:HON), and Accenture Plc (NYSE:ACN). All of these stocks’ market caps match AVGO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UNP | 54 | 4424562 | -1 |
| AMGN | 46 | 2982796 | 0 |
| HON | 56 | 2984847 | -1 |
| ACN | 40 | 976533 | 6 |
| Average | 49 | 2842185 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49 hedge funds with bullish positions and the average amount invested in these stocks was $2842 million. That figure was $3326 million in AVGO’s case. Honeywell International Inc. (NYSE:HON) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 40 bullish hedge fund positions. Broadcom Inc (NASDAQ:AVGO) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately AVGO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AVGO were disappointed as the stock returned -14.7% during the same 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
