Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With this in mind let’s see whether Sirius XM Holdings Inc (NASDAQ:SIRI) makes for a good investment at the moment. We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Sirius XM Holdings Inc (NASDAQ:SIRI) a buy right now? Money managers are becoming less confident. The number of bullish hedge fund bets were cut by 5 in recent months. Our calculations also showed that SIRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). SIRI was in 31 hedge funds’ portfolios at the end of December. There were 36 hedge funds in our database with SIRI holdings at the end of the previous quarter.
Clint Carlson of Carlson Capital
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the latest hedge fund action regarding Sirius XM Holdings Inc (NASDAQ:SIRI).
How are hedge funds trading Sirius XM Holdings Inc (NASDAQ:SIRI)?
Heading into the first quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SIRI over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Sirius XM Holdings Inc (NASDAQ:SIRI) was held by Berkshire Hathaway, which reported holding $974.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $221.7 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Zimmer Partners. In terms of the portfolio weights assigned to each position KCL Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 1.44% of its 13F portfolio. Black-and-White Capital is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to SIRI.
Due to the fact that Sirius XM Holdings Inc (NASDAQ:SIRI) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that elected to cut their full holdings last quarter. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners sold off the largest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $28.1 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dumped about $12 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sirius XM Holdings Inc (NASDAQ:SIRI) but similarly valued. These stocks are PPG Industries, Inc. (NYSE:PPG), LyondellBasell Industries NV (NYSE:LYB), Johnson Controls International plc (NYSE:JCI), and Electronic Arts Inc. (NASDAQ:EA). This group of stocks’ market caps resemble SIRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPG | 35 | 465224 | 5 |
| LYB | 40 | 377389 | 6 |
| JCI | 37 | 1119829 | 13 |
| EA | 68 | 2359890 | -2 |
| Average | 45 | 1080583 | 5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1081 million. That figure was $1431 million in SIRI’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand PPG Industries, Inc. (NYSE:PPG) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Sirius XM Holdings Inc (NASDAQ:SIRI) is even less popular than PPG. Hedge funds dodged a bullet by taking a bearish stance towards SIRI. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately SIRI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SIRI investors were disappointed as the stock returned -18.7% during the same time period 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 most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
