Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Commscope Holding Company Inc (NASDAQ:COMM)? The smart money sentiment can provide an answer to this question.
Commscope Holding Company Inc (NASDAQ:COMM) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Commscope Holding Company Inc (NASDAQ:COMM) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 52. Our calculations also showed that COMM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. With all of this in mind we’re going to take a glance at the new hedge fund action surrounding Commscope Holding Company Inc (NASDAQ:COMM).
Andrew Raab of FPR Partners
Do Hedge Funds Think COMM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in COMM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Commscope Holding Company Inc (NASDAQ:COMM) was held by FPR Partners, which reported holding $235.6 million worth of stock at the end of September. It was followed by Lyrical Asset Management with a $113.8 million position. Other investors bullish on the company included Adage Capital Management, Empyrean Capital Partners, and Yiheng Capital. In terms of the portfolio weights assigned to each position VIEX Capital Advisors allocated the biggest weight to Commscope Holding Company Inc (NASDAQ:COMM), around 6.27% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, earmarking 6.25 percent of its 13F equity portfolio to COMM.
As one would reasonably expect, some big names were breaking ground themselves. Yiheng Capital, managed by Jonathan Guo, assembled the biggest position in Commscope Holding Company Inc (NASDAQ:COMM). Yiheng Capital had $27.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $16.1 million investment in the stock during the quarter. The other funds with brand new COMM positions are Steve Cohen’s Point72 Asset Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Eric Singer’s VIEX Capital Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Commscope Holding Company Inc (NASDAQ:COMM) but similarly valued. We will take a look at Cardlytics, Inc. (NASDAQ:CDLX), ACV Auctions Inc. (NASDAQ:ACVA), Retail Properties of America Inc (NYSE:RPAI), Cannae Holdings, Inc. (NYSE:CNNE), United States Cellular Corporation (NYSE:USM), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), and GrafTech International Ltd. (NYSE:EAF). All of these stocks’ market caps are closest to COMM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDLX | 23 | 830080 | -6 |
| ACVA | 22 | 230648 | 0 |
| RPAI | 11 | 61780 | -5 |
| CNNE | 35 | 446118 | 1 |
| USM | 9 | 72313 | 1 |
| KTOS | 15 | 232817 | -3 |
| EAF | 31 | 247108 | -5 |
| Average | 20.9 | 302981 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $682 million in COMM’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Commscope Holding Company Inc (NASDAQ:COMM) is more popular among hedge funds. Our overall hedge fund sentiment score for COMM is 77.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately COMM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COMM were disappointed as the stock returned -26.7% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
