The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Electronic Arts Inc. (NASDAQ:EA).
Is Electronic Arts Inc. (NASDAQ:EA) a bargain? The best stock pickers were becoming hopeful. The number of long hedge fund positions increased by 12 recently. Electronic Arts Inc. (NASDAQ:EA) was in 56 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 79. Our calculations also showed that EA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 44 hedge funds in our database with EA holdings at the end of March.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium 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 analyze the fresh hedge fund action surrounding Electronic Arts Inc. (NASDAQ:EA).
Do Hedge Funds Think EA Is A Good Stock To Buy Now?
At the end of June, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. By comparison, 67 hedge funds held shares or bullish call options in EA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the largest position in Electronic Arts Inc. (NASDAQ:EA), worth close to $243.1 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $221.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of John Overdeck and David Siegel’s Two Sigma Advisors, Alexander Mitchell’s Scopus Asset Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Force Hill Capital Management allocated the biggest weight to Electronic Arts Inc. (NASDAQ:EA), around 3.51% of its 13F portfolio. Adam Capital is also relatively very bullish on the stock, earmarking 2.89 percent of its 13F equity portfolio to EA.
As one would reasonably expect, key money managers have jumped into Electronic Arts Inc. (NASDAQ:EA) headfirst. Scopus Asset Management, managed by Alexander Mitchell, created the biggest position in Electronic Arts Inc. (NASDAQ:EA). Scopus Asset Management had $172.6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $82.3 million position during the quarter. The other funds with brand new EA positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Alexander Mitchell’s Scopus Asset Management, and Steve Cohen’s Point72 Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Electronic Arts Inc. (NASDAQ:EA) but similarly valued. We will take a look at American International Group Inc (NYSE:AIG), Barclays PLC (NYSE:BCS), Microchip Technology Incorporated (NASDAQ:MCHP), Amphenol Corporation (NYSE:APH), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), Baxter International Inc. (NYSE:BAX), and Prudential Financial Inc (NYSE:PRU). This group of stocks’ market values resemble EA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AIG | 39 | 2744991 | 6 |
| BCS | 11 | 119955 | 1 |
| MCHP | 50 | 1121112 | 8 |
| APH | 39 | 1203614 | -3 |
| ALXN | 69 | 10090913 | -8 |
| BAX | 46 | 2911204 | 6 |
| PRU | 28 | 494481 | -9 |
| Average | 40.3 | 2669467 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $2669 million. That figure was $2023 million in EA’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Barclays PLC (NYSE:BCS) is the least popular one with only 11 bullish hedge fund positions. Electronic Arts Inc. (NASDAQ:EA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EA is 70.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 26.3% in 2021 through October 29th and beat the market again by 2.3 percentage points. Unfortunately EA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EA were disappointed as the stock returned -2.4% since the end of June (through 10/29) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
