Was The Smart Money Right About DXC Technology Company (DXC)?

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 DXC Technology Company (NYSE:DXC) based on that data and determine whether they were really smart about the stock.

DXC Technology Company (NYSE:DXC) investors should pay attention to an increase in enthusiasm from smart money recently. DXC Technology Company (NYSE:DXC) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 60. There were 30 hedge funds in our database with DXC positions at the end of the second quarter. Our calculations also showed that DXC 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. With all of this in mind let’s take a glance at the fresh hedge fund action encompassing DXC Technology Company (NYSE:DXC).

Larry Robbins of Glenview Capital

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

At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 37 hedge funds with a bullish position in DXC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Glenview Capital was the largest shareholder of DXC Technology Company (NYSE:DXC), with a stake worth $188.3 million reported as of the end of September. Trailing Glenview Capital was Arrowstreet Capital, which amassed a stake valued at $136.6 million. Miller Value Partners, Point72 Asset Management, and Archon Capital Management 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 Archon Capital Management allocated the biggest weight to DXC Technology Company (NYSE:DXC), around 4.47% of its 13F portfolio. Provenire Capital is also relatively very bullish on the stock, setting aside 4.17 percent of its 13F equity portfolio to DXC.

As aggregate interest increased, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in DXC Technology Company (NYSE:DXC). Point72 Asset Management had $48 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also made a $5.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Ken Griffin’s Citadel Investment Group, and Greg Poole’s Echo Street Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DXC Technology Company (NYSE:DXC) but similarly valued. We will take a look at Bright Horizons Family Solutions Inc (NYSE:BFAM), Gerdau SA (NYSE:GGB), Aramark (NYSE:ARMK), MKS Instruments, Inc. (NASDAQ:MKSI), SEI Investments Company (NASDAQ:SEIC), DigitalOcean Holdings, Inc. (NYSE:DOCN), and BanColombia S.A. (NYSE:CIB). This group of stocks’ market values are closest to DXC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $438 million. That figure was $645 million in DXC’s case. Aramark (NYSE:ARMK) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks DXC Technology Company (NYSE:DXC) is more popular among hedge funds. Our overall hedge fund sentiment score for DXC is 74.5. 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. Unfortunately, DXC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DXC were disappointed as the stock returned -10.5% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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