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 smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Motorola Solutions Inc (NYSE:MSI)? The smart money sentiment can provide an answer to this question.
Motorola Solutions Inc (NYSE:MSI) was in 28 hedge funds’ portfolios at the end of September. MSI investors should pay attention to a decrease in hedge fund sentiment recently. There were 29 hedge funds in our database with MSI holdings 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 Quest Diagnostics Inc (NYSE:DGX), Cenovus Energy Inc (USA) (NYSE:CVE), and Oneok Partners LP (NYSE:OKS) to gather more data points.
Follow Motorola Solutions Inc. (NYSE:MSI)
Follow Motorola Solutions Inc. (NYSE:MSI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s go over the latest action regarding Motorola Solutions Inc (NYSE:MSI).
What have hedge funds been doing with Motorola Solutions Inc (NYSE:MSI)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the most valuable position in Motorola Solutions Inc (NYSE:MSI). Orbis Investment Management has a $675.4 million position in the stock, comprising 4.7% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $101.7 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Leon Cooperman’s Omega Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Seeing as Motorola Solutions Inc (NYSE:MSI) has faced falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds that slashed their positions entirely heading into Q4. Intriguingly, Daniel S. Och’s OZ Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $33.3 million in stock. George Hall’s fund, Clinton Group, also dumped its stock, about $17.7 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 fund heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. These stocks are Quest Diagnostics Inc (NYSE:DGX), Cenovus Energy Inc (USA) (NYSE:CVE), Oneok Partners LP (NYSE:OKS), and ArcelorMittal (ADR) (NYSE:MT). This group of stocks’ market values are closest to MSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DGX | 24 | 349248 | -1 |
| CVE | 20 | 364500 | -3 |
| OKS | 9 | 33692 | 2 |
| MT | 19 | 226760 | -6 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $1.17 billion in MSI’s case. Quest Diagnostics Inc (NYSE:DGX) is the most popular stock in this table. On the other hand Oneok Partners LP (NYSE:OKS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Motorola Solutions Inc (NYSE:MSI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
