Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Fiserv, Inc. (NASDAQ:FISV) changed recently.
Is Fiserv, Inc. (NASDAQ:FISV) a bargain? Investors who are in the know were turning less bullish. The number of long hedge fund positions decreased by 19 lately. Fiserv, Inc. (NASDAQ:FISV) was in 75 hedge funds’ portfolios at the end of March. The all time high for this statistic is 94. Our calculations also showed that FISV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the fresh hedge fund action surrounding Fiserv, Inc. (NASDAQ:FISV).
Do Hedge Funds Think FISV Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 75 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 67 hedge funds with a bullish position in FISV a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, BlueSpruce Investments was the largest shareholder of Fiserv, Inc. (NASDAQ:FISV), with a stake worth $599 million reported as of the end of March. Trailing BlueSpruce Investments was Kensico Capital, which amassed a stake valued at $203.3 million. Steadfast Capital Management, Omega Advisors, and Citadel Investment Group 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 Columbus Point allocated the biggest weight to Fiserv, Inc. (NASDAQ:FISV), around 14.02% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, designating 11.89 percent of its 13F equity portfolio to FISV.
Because Fiserv, Inc. (NASDAQ:FISV) has witnessed a decline in interest from the smart money, logic holds that there lies a certain “tier” of hedgies that slashed their positions entirely in the first quarter. Intriguingly, Gabriel Plotkin’s Melvin Capital Management said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at about $990.4 million in stock, and Leon Shaulov’s Maplelane Capital was right behind this move, as the fund sold off about $261.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 19 funds in the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fiserv, Inc. (NASDAQ:FISV) but similarly valued. We will take a look at Infosys Limited (NYSE:INFY), The TJX Companies, Inc. (NYSE:TJX), Snap Inc. (NYSE:SNAP), Prologis Inc (NYSE:PLD), Truist Financial Corporation (NYSE:TFC), The Bank of Nova Scotia (NYSE:BNS), and China Petroleum & Chemical Corp (NYSE:SNP). This group of stocks’ market values resemble FISV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INFY | 26 | 2011419 | 3 |
| TJX | 63 | 2348057 | -5 |
| SNAP | 73 | 4324308 | 10 |
| PLD | 39 | 771817 | 3 |
| TFC | 36 | 845826 | -4 |
| BNS | 19 | 239536 | 0 |
| SNP | 11 | 210183 | -2 |
| Average | 38.1 | 1535878 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1536 million. That figure was $2748 million in FISV’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Fiserv, Inc. (NASDAQ:FISV) is more popular among hedge funds. Our overall hedge fund sentiment score for FISV is 59.9. 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 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately FISV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FISV were disappointed as the stock returned -6.8% since the end of the first quarter (through 8/6) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
