In this article we will take a look at whether hedge funds think Sirius XM Holdings Inc (NASDAQ:SIRI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is SIRI stock a buy? Sirius XM Holdings Inc (NASDAQ:SIRI) has experienced a decrease in support from the world’s most elite money managers lately. Sirius XM Holdings Inc (NASDAQ:SIRI) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that SIRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. With all of this in mind let’s take a look at the latest hedge fund action surrounding Sirius XM Holdings Inc (NASDAQ:SIRI).
Do Hedge Funds Think SIRI Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the third quarter of 2020. On the other hand, there were a total of 31 hedge funds with a bullish position in SIRI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Berkshire Hathaway was the largest shareholder of Sirius XM Holdings Inc (NASDAQ:SIRI), with a stake worth $318.5 million reported as of the end of December. Trailing Berkshire Hathaway was Zimmer Partners, which amassed a stake valued at $90.1 million. Arrowstreet Capital, GLG Partners, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position KCL Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 2.62% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, setting aside 1.32 percent of its 13F equity portfolio to SIRI.
Judging by the fact that Sirius XM Holdings Inc (NASDAQ:SIRI) has faced a decline in interest from the smart money, logic holds that there is a sect of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Kevin Mok’s Hidden Lake Asset Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, worth close to $13 million in stock, and George Soros’s Soros Fund Management was right behind this move, as the fund cut about $7.2 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sirius XM Holdings Inc (NASDAQ:SIRI) but similarly valued. We will take a look at AutoZone, Inc. (NYSE:AZO), Welltower Inc. (NYSE:WELL), Waste Connections, Inc. (NYSE:WCN), Marathon Petroleum Corp (NYSE:MPC), Zscaler, Inc. (NASDAQ:ZS), Ecopetrol S.A. (NYSE:EC), and Interactive Brokers Group, Inc. (NASDAQ:IBKR). This group of stocks’ market values are closest to SIRI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AZO | 44 | 1445833 | -9 |
| WELL | 26 | 538410 | 1 |
| WCN | 35 | 626810 | 3 |
| MPC | 43 | 1883612 | -13 |
| ZS | 35 | 1208264 | 9 |
| EC | 7 | 102902 | 0 |
| IBKR | 28 | 1108907 | 0 |
| Average | 31.1 | 987820 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $988 million. That figure was $670 million in SIRI’s case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 7 bullish hedge fund positions. Sirius XM Holdings Inc (NASDAQ:SIRI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIRI is 56.6. 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 positive signal but 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 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately SIRI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SIRI were disappointed as the stock returned -2% since the end of December (through 4/12) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
