The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards QuantumScape Corporation (NYSE:QS).
Is QS stock a buy? Money managers seem to be taking a bullish view. QuantumScape Corporation (NYSE:QS) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. This is a large number for a newly listed company. However, our calculations also showed that QS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). Later in this article we will compare QS’ popularity against a group of similarly valued stocks and have a better idea whether hedge funds really see this stock as a “buy”,
Christian Leone of Luxor Capital Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x 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. Now we’re going to take a peek at the fresh hedge fund action regarding QuantumScape Corporation (NYSE:QS).
Do Hedge Funds Think QS Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in QS 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 QuantumScape Corporation (NYSE:QS) was held by Senator Investment Group, which reported holding $354.9 million worth of stock at the end of December. It was followed by Luxor Capital Group with a $352.2 million position. Other investors bullish on the company included Soros Fund Management, JS Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Inherent Group allocated the biggest weight to QuantumScape Corporation (NYSE:QS), around 22.33% of its 13F portfolio. JS Capital is also relatively very bullish on the stock, dishing out 13.39 percent of its 13F equity portfolio to QS.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, initiated the largest position in QuantumScape Corporation (NYSE:QS). Senator Investment Group had $354.9 million invested in the company at the end of the quarter. Christian Leone’s Luxor Capital Group also initiated a $352.2 million position during the quarter. The following funds were also among the new QS investors: George Soros’s Soros Fund Management, Jonathan Soros’s JS Capital, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as QuantumScape Corporation (NYSE:QS) but similarly valued. These stocks are Zillow Group Inc (NASDAQ:Z), LyondellBasell Industries NV (NYSE:LYB), Phillips 66 (NYSE:PSX), XPeng Inc. (NYSE:XPEV), Ball Corporation (NYSE:BLL), Schlumberger Limited. (NYSE:SLB), and Copart, Inc. (NASDAQ:CPRT). This group of stocks’ market valuations are similar to QS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| Z | 83 | 5812175 | 14 |
| LYB | 27 | 682905 | -4 |
| PSX | 26 | 191517 | -1 |
| XPEV | 30 | 820952 | 4 |
| BLL | 44 | 944165 | 11 |
| SLB | 50 | 1226025 | -3 |
| CPRT | 46 | 1137710 | -10 |
| Average | 43.7 | 1545064 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.7 hedge funds with bullish positions and the average amount invested in these stocks was $1545 million. That figure was $1849 million in QS’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Phillips 66 (NYSE:PSX) is the least popular one with only 26 bullish hedge fund positions. QuantumScape Corporation (NYSE:QS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for QS is 22.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately QS wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); QS investors were disappointed as the stock returned -41.6% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
