We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Commscope Holding Company Inc (NASDAQ:COMM) and determine whether hedge funds skillfully traded this stock.
Is Commscope Holding Company Inc (NASDAQ:COMM) a bargain? The best stock pickers were betting on the stock. The number of long hedge fund bets advanced by 1 in recent months. Commscope Holding Company Inc (NASDAQ:COMM) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 52. Our calculations also showed that COMM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 36 hedge funds in our database with COMM positions at the end of the second quarter.
Phillip Gross of Adage Capital
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 we’re going to review the recent hedge fund action surrounding Commscope Holding Company Inc (NASDAQ:COMM).
Do Hedge Funds Think COMM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in COMM over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bob Peck and Andy Raab’s FPR Partners has the most valuable position in Commscope Holding Company Inc (NASDAQ:COMM), worth close to $235.6 million, corresponding to 6.2% of its total 13F portfolio. The second largest stake is held by Andrew Wellington and Jeff Keswin of Lyrical Asset Management, with a $113.8 million position; 1.5% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions comprise Phill Gross and Robert Atchinson’s Adage Capital Management, Michael A. Price and Amos Meron’s Empyrean Capital Partners and Jonathan Guo’s Yiheng Capital. In terms of the portfolio weights assigned to each position VIEX Capital Advisors allocated the biggest weight to Commscope Holding Company Inc (NASDAQ:COMM), around 6.27% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, setting aside 6.25 percent of its 13F equity portfolio to COMM.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Yiheng Capital, managed by Jonathan Guo, initiated the biggest position in Commscope Holding Company Inc (NASDAQ:COMM). Yiheng Capital had $27.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $16.1 million investment in the stock during the quarter. The other funds with brand new COMM positions are Steve Cohen’s Point72 Asset Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Eric Singer’s VIEX Capital Advisors.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Commscope Holding Company Inc (NASDAQ:COMM) but similarly valued. These stocks are Cardlytics, Inc. (NASDAQ:CDLX), ACV Auctions Inc. (NASDAQ:ACVA), Retail Properties of America Inc (NYSE:RPAI), Cannae Holdings, Inc. (NYSE:CNNE), United States Cellular Corporation (NYSE:USM), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), and GrafTech International Ltd. (NYSE:EAF). This group of stocks’ market values match COMM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDLX | 23 | 830080 | -6 |
| ACVA | 22 | 230648 | 0 |
| RPAI | 11 | 61780 | -5 |
| CNNE | 35 | 446118 | 1 |
| USM | 9 | 72313 | 1 |
| KTOS | 15 | 232817 | -3 |
| EAF | 31 | 247108 | -5 |
| Average | 20.9 | 302981 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $682 million in COMM’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Commscope Holding Company Inc (NASDAQ:COMM) is more popular among hedge funds. Our overall hedge fund sentiment score for COMM is 77.3. 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, COMM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on COMM were disappointed as the stock returned -30.9% 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.
