Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Verizon Communications Inc. (NYSE:VZ) based on that data.
Verizon Communications Inc. (NYSE:VZ) has seen an increase in support from the world’s most elite money managers in recent months. Verizon Communications Inc. (NYSE:VZ) was in 69 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 68. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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 let’s check out the key hedge fund action encompassing Verizon Communications Inc. (NYSE:VZ).
Do Hedge Funds Think VZ Is A Good Stock To Buy Now?
At the end of March, a total of 69 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VZ over the last 23 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the biggest position in Verizon Communications Inc. (NYSE:VZ). Berkshire Hathaway has a $9.2356 billion position in the stock, comprising 3.4% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $317.4 million position; 0.5% of its 13F portfolio is allocated to the stock. Other peers that hold long positions encompass Matthew Stadelman’s Diamond Hill Capital, Michael A. Price and Amos Meron’s Empyrean Capital Partners and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Verizon Communications Inc. (NYSE:VZ), around 8.84% of its 13F portfolio. Courage Capital is also relatively very bullish on the stock, setting aside 5.95 percent of its 13F equity portfolio to VZ.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Diamond Hill Capital, managed by Matthew Stadelman, initiated the largest position in Verizon Communications Inc. (NYSE:VZ). Diamond Hill Capital had $242 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $121.7 million investment in the stock during the quarter. The following funds were also among the new VZ investors: Renaissance Technologies, Brandon Haley’s Holocene Advisors, and Jinghua Yan’s TwinBeech Capital.
Let’s check out hedge fund activity in other stocks similar to Verizon Communications Inc. (NYSE:VZ). These stocks are Exxon Mobil Corporation (NYSE:XOM), Netflix, Inc. (NASDAQ:NFLX), Adobe Inc. (NASDAQ:ADBE), The Coca-Cola Company (NYSE:KO), Cisco Systems, Inc. (NASDAQ:CSCO), Toyota Motor Corporation (NYSE:TM), and AT&T Inc. (NYSE:T). All of these stocks’ market caps resemble VZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XOM | 65 | 2770198 | 2 |
| NFLX | 110 | 14159343 | -6 |
| ADBE | 107 | 12111692 | -7 |
| KO | 61 | 24903946 | -1 |
| CSCO | 59 | 5194074 | -1 |
| TM | 18 | 824174 | 7 |
| T | 63 | 2701777 | 5 |
| Average | 69 | 8952172 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 69 hedge funds with bullish positions and the average amount invested in these stocks was $8952 million. That figure was $11384 million in VZ’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 18 bullish hedge fund positions. Verizon Communications Inc. (NYSE:VZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VZ is 64.7. 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 negative signal and 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 25.8% in 2021 through August 6th and surpassed the market again by 6.7 percentage points. Unfortunately VZ wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VZ investors were disappointed as the stock returned -2.9% since the end of March (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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
