After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Telefonica Brasil SA (NYSE:VIV).
Telefonica Brasil SA (NYSE:VIV) has experienced an increase in hedge fund interest in recent months. VIV was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. There were 9 hedge funds in our database with VIV positions at the end of the previous quarter. Our calculations also showed that VIV isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Cliff Asness of AQR Capital Management
We’re going to take a look at the key hedge fund action surrounding Telefonica Brasil SA (NYSE:VIV).
What have hedge funds been doing with Telefonica Brasil SA (NYSE:VIV)?
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in VIV at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Telefonica Brasil SA (NYSE:VIV), which was worth $57.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $14 million worth of shares. Moreover, Millennium Management, AQR Capital Management, and Teewinot Capital Advisers were also bullish on Telefonica Brasil SA (NYSE:VIV), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Telefonica Brasil SA (NYSE:VIV) headfirst. NWI Management, managed by Hari Hariharan, initiated the biggest position in Telefonica Brasil SA (NYSE:VIV). NWI Management had $1.2 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Telefonica Brasil SA (NYSE:VIV) but similarly valued. We will take a look at Essex Property Trust Inc (NYSE:ESS), CNH Industrial NV (NYSE:CNHI), Weibo Corp (NASDAQ:WB), and Nomura Holdings, Inc. (NYSE:NMR). This group of stocks’ market caps are closest to VIV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESS | 16 | 406511 | -7 |
| CNHI | 14 | 341616 | 0 |
| WB | 23 | 289445 | 3 |
| NMR | 2 | 38756 | -2 |
| Average | 13.75 | 269082 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $87 million in VIV’s case. Weibo Corp (NASDAQ:WB) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 2 bullish hedge fund positions. Telefonica Brasil SA (NYSE:VIV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WB might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
