The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Ford Motor Company (NYSE:F) and find out how it is affected by hedge funds’ moves.
Is Ford Motor Company (NYSE:F) undervalued? Money managers are taking a bullish view. The number of long hedge fund positions increased by 2 lately. F was in 38 hedge funds’ portfolios at the end of the third quarter of 2015. There were 36 hedge funds in our database with F positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as BT Group plc (ADR) (NYSE:BT), The Bank of Nova Scotia (USA) (NYSE:BNS), and Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA) to gather more data points.
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To most traders, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are over 8000 funds trading today, Our experts look at the aristocrats of this club, approximately 700 funds. These investment experts preside over the majority of the smart money’s total capital, and by keeping track of their unrivaled equity investments, Insider Monkey has figured out a few investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s review the new action encompassing Ford Motor Company (NYSE:F).
What have hedge funds been doing with Ford Motor Company (NYSE:F)?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter. With the smart money’s sentiment swirling, there exist a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the number one position in Ford Motor Company (NYSE:F). Pzena Investment Management has an $248.9 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by Anchor Bolt Capital, managed by Robert Polak, which holds an $110.5 million position; 3.7% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish encompass Ken Heebner’s Capital Growth Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Daniel S. Och’s OZ Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. Anchor Bolt Capital, managed by Robert Polak, initiated the largest position in Ford Motor Company (NYSE:F). Anchor Bolt Capital had $110.5 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also initiated an $70.9 million position during the quarter. The other funds with new positions in the stock are Robert Polak’s Anchor Bolt Capital, Mike Masters’s Masters Capital Management, and John Segrich and Michael Molnar’s Lorem Ipsum Management.
Let’s check out hedge fund activity in other stocks similar to Ford Motor Company (NYSE:F). We will take a look at BT Group plc (ADR) (NYSE:BT), The Bank of Nova Scotia (USA) (NYSE:BNS), Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA), and Metlife Inc (NYSE:MET). This group of stocks’ market values resemble F’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BT | 11 | 151176 | 1 |
| BNS | 17 | 327227 | 1 |
| BBVA | 4 | 4202 | 0 |
| MET | 47 | 1723169 | -8 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $907 million in F’s case. Metlife Inc (NYSE:MET) is the most popular stock in this table, whereas the least popular one is Banco Bilbao Vizcaya Argentaria SA (ADR) (NYSE:BBVA). In comparison, Ford Motor Company (NYSE:F), with 38 bullish hedge fund positions, is not the most popular stock in this group but still it has attracted attention from investors above average. Although this may imply it is a stock worth considering, we’d rather spend our time researching stocks that hedge funds are collectively most fond of, such as MET, which, in this case, may represent a better alternative.
