Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Broadcom Inc (NASDAQ:AVGO) based on that data and determine whether they were really smart about the stock.
Broadcom Inc (NASDAQ:AVGO) has seen an increase in enthusiasm from smart money in recent months. Broadcom Inc (NASDAQ:AVGO) was in 50 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 83. Our calculations also showed that AVGO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. Keeping this in mind let’s check out the recent hedge fund action regarding Broadcom Inc (NASDAQ:AVGO).
Do Hedge Funds Think AVGO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter of 2021. By comparison, 59 hedge funds held shares or bullish call options in AVGO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cantillon Capital Management was the largest shareholder of Broadcom Inc (NASDAQ:AVGO), with a stake worth $525 million reported as of the end of September. Trailing Cantillon Capital Management was First Pacific Advisors LLC, which amassed a stake valued at $411.5 million. Citadel Investment Group, Lyrical Asset Management, and Farallon Capital 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 First Pacific Advisors LLC allocated the biggest weight to Broadcom Inc (NASDAQ:AVGO), around 5.34% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 4.43 percent of its 13F equity portfolio to AVGO.
Now, key hedge funds have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, assembled the largest position in Broadcom Inc (NASDAQ:AVGO). Holocene Advisors had $42.8 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $31.8 million position during the quarter. The following funds were also among the new AVGO investors: Dmitry Balyasny’s Balyasny Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Renaissance Technologies.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Broadcom Inc (NASDAQ:AVGO) but similarly valued. We will take a look at Costco Wholesale Corporation (NASDAQ:COST), Chevron Corporation (NYSE:CVX), AT&T Inc. (NYSE:T), AbbVie Inc (NYSE:ABBV), Wells Fargo & Company (NYSE:WFC), Merck & Co., Inc. (NYSE:MRK), and AstraZeneca plc (NYSE:AZN). This group of stocks’ market caps are closest to AVGO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COST | 55 | 4393346 | 1 |
| CVX | 51 | 4442202 | 1 |
| T | 66 | 3212098 | -2 |
| ABBV | 81 | 4140050 | -1 |
| WFC | 88 | 6188279 | -6 |
| MRK | 77 | 4550626 | -2 |
| AZN | 41 | 3757394 | 4 |
| Average | 65.6 | 4383428 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 65.6 hedge funds with bullish positions and the average amount invested in these stocks was $4383 million. That figure was $2706 million in AVGO’s case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand AstraZeneca plc (NYSE:AZN) is the least popular one with only 41 bullish hedge fund positions. Broadcom Inc (NASDAQ:AVGO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AVGO is 35.6. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on AVGO as the stock returned 21.6% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
