Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Motorola Solutions Inc (NYSE:MSI) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Motorola Solutions Inc (NYSE:MSI) has experienced a decrease in support from the world’s most elite money managers lately. Motorola Solutions Inc (NYSE:MSI) was in 34 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that MSI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
William Gray of Orbis Investment Management
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. Now let’s take a peek at the fresh hedge fund action surrounding Motorola Solutions Inc (NYSE:MSI).
Do Hedge Funds Think MSI Is A Good Stock To Buy Now?
At third quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MSI over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Motorola Solutions Inc (NYSE:MSI) was held by Orbis Investment Management, which reported holding $484.3 million worth of stock at the end of September. It was followed by Newbrook Capital Advisors with a $98.7 million position. Other investors bullish on the company included Citadel Investment Group, Holocene Advisors, and Adage Capital Management. In terms of the portfolio weights assigned to each position Newbrook Capital Advisors allocated the biggest weight to Motorola Solutions Inc (NYSE:MSI), around 7.18% of its 13F portfolio. Orbis Investment Management is also relatively very bullish on the stock, setting aside 3.33 percent of its 13F equity portfolio to MSI.
Seeing as Motorola Solutions Inc (NYSE:MSI) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there was a specific group of hedge funds who sold off their entire stakes last quarter. It’s worth mentioning that Leon Shaulov’s Maplelane Capital dropped the largest position of all the hedgies monitored by Insider Monkey, worth an estimated $15.6 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund sold off about $11.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. We will take a look at Cognizant Technology Solutions Corp (NASDAQ:CTSH), Ross Stores, Inc. (NASDAQ:ROST), ResMed Inc. (NYSE:RMD), Republic Services, Inc. (NYSE:RSG), SVB Financial Group (NASDAQ:SIVB), Travelers Companies Inc (NYSE:TRV), and Kinder Morgan Inc (NYSE:KMI). This group of stocks’ market values match MSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTSH | 29 | 2336693 | -12 |
| ROST | 41 | 1220437 | -10 |
| RMD | 28 | 396289 | 2 |
| RSG | 31 | 1222055 | -3 |
| SIVB | 45 | 1207137 | -4 |
| TRV | 32 | 433119 | -2 |
| KMI | 43 | 1012275 | 5 |
| Average | 35.6 | 1118286 | -3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.6 hedge funds with bullish positions and the average amount invested in these stocks was $1118 million. That figure was $1266 million in MSI’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 28 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MSI is 44.5. 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 managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on MSI as the stock returned 0.1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Motorola Solutions Inc. (NYSE:MSI)
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Disclosure: None. This article was originally published at Insider Monkey.
