Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) in this article.
Is TSM stock a buy or sell? Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) has seen an increase in hedge fund sentiment recently. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) was in 72 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 67. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TSM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). Now we’re going to analyze the fresh hedge fund action surrounding Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).
Do Hedge Funds Think TSM Is A Good Stock To Buy Now?
At the end of December, a total of 72 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TSM over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) was held by Fisher Asset Management, which reported holding $3013.9 million worth of stock at the end of December. It was followed by SB Management with a $1301.8 million position. Other investors bullish on the company included Arrowstreet Capital, AQR Capital Management, and Viking Global. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), around 22.03% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, earmarking 7.74 percent of its 13F equity portfolio to TSM.
As one would reasonably expect, some big names were breaking ground themselves. Graham Capital Management, managed by Kenneth Tropin, initiated the largest position in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). Graham Capital Management had $20.7 million invested in the company at the end of the quarter. Javier Velazquez’s Albar Capital also initiated a $13.8 million position during the quarter. The following funds were also among the new TSM investors: Dipak Patel’s Alight Capital, Terry Smith’s Fundsmith LLP, and Canhui Ou’s One01 Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) but similarly valued. These stocks are Berkshire Hathaway Inc. (NYSE:BRK-B), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), JPMorgan Chase & Co. (NYSE:JPM), Mastercard Incorporated (NYSE:MA), and The Procter & Gamble Company (NYSE:PG). All of these stocks’ market caps are closest to TSM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRK-B | 110 | 20795968 | 1 |
| V | 166 | 23599162 | 6 |
| JNJ | 81 | 5820696 | -1 |
| WMT | 70 | 6197019 | 1 |
| JPM | 112 | 6967178 | -6 |
| MA | 154 | 17978734 | 21 |
| PG | 83 | 10421985 | 8 |
| Average | 110.9 | 13111535 | 4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 110.9 hedge funds with bullish positions and the average amount invested in these stocks was $13112 million. That figure was $11843 million in TSM’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 70 bullish hedge fund positions. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TSM is 41. 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. 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% in 2021 through March 12th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on TSM as the stock returned 8.5% since the end of the fourth quarter (through 3/12) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
