Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Motorola Solutions Inc (NYSE:MSI) was in 26 hedge funds’ portfolios at the end of September. MSI has experienced an increase in activity from the world’s largest hedge funds lately. There were 20 hedge funds in our database with MSI holdings at the end of the previous quarter. Our calculations also showed that MSI isn’t among the 30 most popular stocks among hedge funds.
According to most traders, hedge funds are assumed to be slow, outdated investment tools of the past. While there are greater than 8,000 funds with their doors open at the moment, We choose to focus on the masters of this club, around 700 funds. Most estimates calculate that this group of people administer the majority of all hedge funds’ total asset base, and by observing their best picks, Insider Monkey has unsheathed various investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to take a glance at the new hedge fund action regarding Motorola Solutions Inc (NYSE:MSI).
What have hedge funds been doing with Motorola Solutions Inc (NYSE:MSI)?
Heading into the fourth quarter of 2018, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MSI over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in Motorola Solutions Inc (NYSE:MSI). Arrowstreet Capital has a $223.5 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is D. E. Shaw of D E Shaw, with a $172.4 million position; 0.2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions encompass Philippe Laffont’s Coatue Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Motorola Solutions Inc (NYSE:MSI) headfirst. Coatue Management, managed by Philippe Laffont, created the most valuable position in Motorola Solutions Inc (NYSE:MSI). Coatue Management had $110.1 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $18.2 million position during the quarter. The following funds were also among the new MSI investors: Matthew Tewksbury’s Stevens Capital Management, Richard Chilton’s Chilton Investment Company, and John Brandmeyer’s Cognios Capital.
Let’s go over hedge fund activity in other stocks similar to Motorola Solutions Inc (NYSE:MSI). These stocks are POSCO (NYSE:PKX), WEC Energy Group, Inc. (NYSE:WEC), Waste Connections, Inc. (NYSE:WCN), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market valuations are similar to MSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKX | 14 | 157776 | 0 |
| WEC | 19 | 357766 | 4 |
| WCN | 30 | 1002797 | -4 |
| HRL | 12 | 66675 | -1 |
| Average | 18.75 | 396254 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $839 million in MSI’s case. Waste Connections, Inc. (NYSE:WCN) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 12 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) 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 WCN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
