Was The Smart Money Right About Cisco Systems, Inc. (CSCO)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Cisco Systems, Inc. (NASDAQ:CSCO).

Cisco Systems, Inc. (NASDAQ:CSCO) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Cisco Systems, Inc. (NASDAQ:CSCO) was in 60 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 68. There were 59 hedge funds in our database with CSCO holdings at the end of September. Our calculations also showed that CSCO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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David Siegel of Two Sigma Advisors

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Do Hedge Funds Think CSCO Is A Good Stock To Buy Now?

At the end of December, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from one quarter earlier. By comparison, 68 hedge funds held shares or bullish call options in CSCO a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Cisco Systems, Inc. (NASDAQ:CSCO) was held by Generation Investment Management, which reported holding $1043.5 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $938.9 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to Cisco Systems, Inc. (NASDAQ:CSCO), around 4.66% of its 13F portfolio. Humankind Investments is also relatively very bullish on the stock, setting aside 3.83 percent of its 13F equity portfolio to CSCO.

As industrywide interest jumped, some big names were breaking ground themselves. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, established the biggest position in Cisco Systems, Inc. (NASDAQ:CSCO). Woodline Partners had $14.3 million invested in the company at the end of the quarter. Nicholas Bagnall’s Te Ahumairangi Investment Management also made a $9.3 million investment in the stock during the quarter. The following funds were also among the new CSCO investors: Ray Dalio’s Bridgewater Associates, James Katz’s Humankind Investments, and Qing Li’s Sciencast Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cisco Systems, Inc. (NASDAQ:CSCO) but similarly valued. These stocks are Thermo Fisher Scientific Inc. (NYSE:TMO), Broadcom Inc (NASDAQ:AVGO), Exxon Mobil Corporation (NYSE:XOM), Accenture Plc (NYSE:ACN), QUALCOMM, Incorporated (NASDAQ:QCOM), T-Mobile US, Inc. (NYSE:TMUS), and Costco Wholesale Corporation (NASDAQ:COST). All of these stocks’ market caps resemble CSCO’s market cap.

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As you can see these stocks had an average of 72.9 hedge funds with bullish positions and the average amount invested in these stocks was $4088 million. That figure was $4974 million in CSCO’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 50 bullish hedge fund positions. Cisco Systems, Inc. (NASDAQ:CSCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CSCO is 41.9. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on CSCO as the stock returned 15.5% since the end of the fourth quarter (through 4/30) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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