Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Motorola Solutions Inc (NYSE:MSI) was in 29 hedge funds’ portfolios at the end of March. MSI shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 23 hedge funds in our database with MSI positions at the end of the previous quarter. Our calculations also showed that msi isn’t among the 30 most popular stocks among hedge funds.
To most traders, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, We hone in on the top tier of this club, around 750 funds. It is estimated that this group of investors shepherd the lion’s share of the hedge fund industry’s total capital, and by paying attention to their first-class investments, Insider Monkey has figured out a few investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to review the latest hedge fund action surrounding Motorola Solutions Inc (NYSE:MSI).
How are hedge funds trading Motorola Solutions Inc (NYSE:MSI)?
At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in MSI a year ago. 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, D E Shaw was the largest shareholder of Motorola Solutions Inc (NYSE:MSI), with a stake worth $155.7 million reported as of the end of March. Trailing D E Shaw was Arrowstreet Capital, which amassed a stake valued at $107.2 million. Citadel Investment Group, Renaissance Technologies, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, created the most outsized position in Motorola Solutions Inc (NYSE:MSI). Renaissance Technologies had $94.7 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also initiated a $17.4 million position during the quarter. The following funds were also among the new MSI investors: Matthew Tewksbury’s Stevens Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and James Dondero’s Highland Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. These stocks are Mercadolibre Inc (NASDAQ:MELI), Sun Life Financial Inc. (NYSE:SLF), PPL Corporation (NYSE:PPL), and DTE Energy Company (NYSE:DTE). This group of stocks’ market valuations are similar to MSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MELI | 41 | 2802210 | 10 |
| SLF | 11 | 103048 | 1 |
| PPL | 22 | 867762 | -1 |
| DTE | 25 | 718544 | 2 |
| Average | 24.75 | 1122891 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $1123 million. That figure was $835 million in MSI’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand Sun Life Financial Inc. (NYSE:SLF) is the least popular one with only 11 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on MSI as the stock returned 7.7% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
