At Insider Monkey we follow around 740 of the top investors and even though many of them underperformed the raging bull market, the history teaches us that over the long-run they still manage to beat the market after adjusting for risk, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following their best picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
In this article, let’s take a closer look at General Motors Company (NYSE:GM), which registered a decrease in enthusiasm from smart money in recent months. There were 62 funds in our database with GM holdings at the end of September, compared to 65 funds at the end of June. 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 Metlife Inc (NYSE:MET), salesforce.com, inc. (NYSE:CRM), and The Southern Company (NYSE:SO) to gather more data points.
Follow General Motors Co (NYSE:GM)
Follow General Motors Co (NYSE:GM)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Linda Parton / Shutterstock.com
Now, let’s check out the new action surrounding General Motors Company (NYSE:GM).
What have hedge funds been doing with General Motors Company (NYSE:GM)?
At the end of the third quarter, a total of 62 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 5% from the end of the second quarter. On the other hand, there were a total of 84 hedge funds with a bullish position in GM at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Berkshire Hathaway, led by the legendary Warren Buffett, holds the most valuable position in General Motors Company (NYSE:GM). According to regulatory filings, Berkshire Hathaway has a $1.59 billion position in the stock, comprising 1.2% of its 13F portfolio. The second largest stake is held by David Einhorn’s Greenlight Capital, which disclosed a $540.1 million position; the fund has 10.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Cliff Asness’s AQR Capital Management, Robert Polak’s Anchor Bolt Capital, and Mohnish Pabrai’s Dalal Street. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the biggest investment of all the investors followed by Insider Monkey, valued at an estimated $36 million in call options. Frank Brosens’s fund, Taconic Capital, also dropped its stock, worth about $29.4 million.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as General Motors Company (NYSE:GM) but similarly valued. We will take a look at Metlife Inc (NYSE:MET), salesforce.com, inc. (NYSE:CRM), The Southern Company (NYSE:SO), and American Tower Corp (NYSE:AMT). This group of stocks’ market values resemble GM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MET | 37 | 1525634 | -8 |
| CRM | 66 | 2135618 | 6 |
| SO | 20 | 568071 | -1 |
| AMT | 48 | 2928784 | -1 |
As you can see these stocks had an average of 43 investors with bullish positions and the average amount invested in these stocks was $1.79 billion. That figure was $3.53 billion in GM’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand The Southern Company (NYSE:SO) is the least popular one with only 20 bullish hedge fund positions. General Motors Company (NYSE:GM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CRM might be a better candidate to consider taking a long position in.
Disclosure: none.
