Were Hedge Funds Right About Piling Into Qurate Retail, Inc. (QRTEA)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Qurate Retail, Inc. (NASDAQ:QRTEA) in this article.

Qurate Retail, Inc. (NASDAQ:QRTEA) has experienced an increase in activity from the world’s largest hedge funds recently. Qurate Retail, Inc. (NASDAQ:QRTEA) was in 43 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 32 hedge funds in our database with QRTEA holdings at the end of March. Our calculations also showed that QRTEA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Thomas Bancroft of Makaira Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to view the fresh hedge fund action encompassing Qurate Retail, Inc. (NASDAQ:QRTEA).

Hedge fund activity in Qurate Retail, Inc. (NASDAQ:QRTEA)

Heading into the third quarter of 2020, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 34% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in QRTEA over the last 20 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, FPR Partners held the most valuable stake in Qurate Retail, Inc. (NASDAQ:QRTEA), which was worth $165 million at the end of the third quarter. On the second spot was Lyrical Asset Management which amassed $122.4 million worth of shares. Abrams Bison Investments, AQR Capital Management, and Makaira Partners 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 Makaira Partners allocated the biggest weight to Qurate Retail, Inc. (NASDAQ:QRTEA), around 14.84% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, designating 14.71 percent of its 13F equity portfolio to QRTEA.

As one would reasonably expect, key money managers have jumped into Qurate Retail, Inc. (NASDAQ:QRTEA) headfirst. Carlson Capital, managed by Clint Carlson, initiated the biggest position in Qurate Retail, Inc. (NASDAQ:QRTEA). Carlson Capital had $25.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $12.2 million position during the quarter. The following funds were also among the new QRTEA investors: Ken Grossman and Glen Schneider’s SG Capital Management, Robert Pitts’s Steadfast Capital Management, and Frederick DiSanto’s Ancora Advisors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Qurate Retail, Inc. (NASDAQ:QRTEA) but similarly valued. These stocks are BridgeBio Pharma, Inc. (NASDAQ:BBIO), Healthcare Realty Trust Inc (NYSE:HR), JBG SMITH Properties (NYSE:JBGS), Eldorado Resorts Inc (NASDAQ:ERI), Hawaiian Electric Industries, Inc. (NYSE:HE), Envestnet Inc (NYSE:ENV), and China Biologic Products Holdings Inc (NASDAQ:CBPO). This group of stocks’ market valuations are similar to QRTEA’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $743 million in QRTEA’s case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand BridgeBio Pharma, Inc. (NASDAQ:BBIO) is the least popular one with only 14 bullish hedge fund positions. Qurate Retail, Inc. (NASDAQ:QRTEA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QRTEA is 81.4. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately QRTEA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on QRTEA were disappointed as the stock returned 5.3% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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