Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Ford Motor Company (NYSE:F) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Ford Motor Company (NYSE:F) going to take off soon? Prominent investors were getting less optimistic. The number of long hedge fund bets shrunk by 4 in recent months. Ford Motor Company (NYSE:F) was in 51 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 55. Our calculations also showed that F isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 55 hedge funds in our database with F positions at the end of the second quarter.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s view the recent hedge fund action surrounding Ford Motor Company (NYSE:F).
Do Hedge Funds Think F Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. By comparison, 38 hedge funds held shares or bullish call options in F a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Ford Motor Company (NYSE:F), which was worth $422.4 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $342.7 million worth of shares. Citadel Investment Group, Citadel Investment Group, and Candlestick Capital 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 Lodge Hill Capital allocated the biggest weight to Ford Motor Company (NYSE:F), around 4.28% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, setting aside 4.18 percent of its 13F equity portfolio to F.
Due to the fact that Ford Motor Company (NYSE:F) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that elected to cut their entire stakes in the third quarter. At the top of the heap, Panayotis Takis Sparaggis’s Alkeon Capital Management sold off the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $224 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $61 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Ford Motor Company (NYSE:F). We will take a look at ING Groep N.V. (NYSE:ING), Twilio Inc. (NYSE:TWLO), Emerson Electric Co. (NYSE:EMR), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Relx PLC (NYSE:RELX), UBS Group AG (NYSE:UBS), and General Dynamics Corporation (NYSE:GD). All of these stocks’ market caps are similar to F’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ING | 8 | 693351 | -1 |
| TWLO | 96 | 6369513 | -2 |
| EMR | 41 | 671007 | -4 |
| CRWD | 74 | 6742307 | 8 |
| RELX | 7 | 66312 | 1 |
| UBS | 15 | 166803 | 0 |
| GD | 36 | 6719691 | -1 |
| Average | 39.6 | 3061283 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.6 hedge funds with bullish positions and the average amount invested in these stocks was $3061 million. That figure was $1642 million in F’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 7 bullish hedge fund positions. Ford Motor Company (NYSE:F) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for F is 53.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on F as the stock returned 44.8% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
