Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards DISH Network Corp. (NASDAQ:DISH).
Is DISH a good stock to buy now? DISH Network Corp. (NASDAQ:DISH) was in 60 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 58. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DISH shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 54 hedge funds in our database with DISH holdings at the end of June. Our calculations also showed that DISH isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Scott Bessent of Key Square Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a peek at the latest hedge fund action encompassing DISH Network Corp. (NASDAQ:DISH).
How are hedge funds trading DISH Network Corp. (NASDAQ:DISH)?
At the end of the third quarter, a total of 60 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2020. By comparison, 38 hedge funds held shares or bullish call options in DISH 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 DISH Network Corp. (NASDAQ:DISH) was held by Eagle Capital Management, which reported holding $468.9 million worth of stock at the end of September. It was followed by Palestra Capital Management with a $248.2 million position. Other investors bullish on the company included Jericho Capital Asset Management, Paulson & Co, and Key Square Capital Management. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to DISH Network Corp. (NASDAQ:DISH), around 47.54% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, dishing out 12.59 percent of its 13F equity portfolio to DISH.
As industrywide interest jumped, key hedge funds have jumped into DISH Network Corp. (NASDAQ:DISH) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in DISH Network Corp. (NASDAQ:DISH). Marshall Wace LLP had $16.4 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also made a $15.7 million investment in the stock during the quarter. The other funds with brand new DISH positions are Leon Shaulov’s Maplelane Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Renaissance Technologies.
Let’s go over hedge fund activity in other stocks similar to DISH Network Corp. (NASDAQ:DISH). These stocks are Broadridge Financial Solutions, Inc. (NYSE:BR), Fifth Third Bancorp (NASDAQ:FITB), Expeditors International of Washington (NASDAQ:EXPD), Ryanair Holdings plc (NASDAQ:RYAAY), Xylem Inc (NYSE:XYL), NVR, Inc. (NYSE:NVR), and CarMax Inc (NYSE:KMX). This group of stocks’ market values match DISH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BR | 33 | 244445 | 9 |
| FITB | 30 | 358412 | -2 |
| EXPD | 31 | 528714 | -2 |
| RYAAY | 16 | 659788 | -5 |
| XYL | 21 | 592977 | -1 |
| NVR | 42 | 1141650 | 3 |
| KMX | 54 | 1449835 | 8 |
| Average | 32.4 | 710832 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $711 million. That figure was $1595 million in DISH’s case. CarMax Inc (NYSE:KMX) is the most popular stock in this table. On the other hand Ryanair Holdings plc (NASDAQ:RYAAY) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks DISH Network Corp. (NASDAQ:DISH) is more popular among hedge funds. Our overall hedge fund sentiment score for DISH is 90. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on DISH as the stock returned 27.4% since the end of September (through 12/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
