Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
The stock that we are going to discuss in this article is The Walt Disney Company (NYSE:DIS). During the third quarter, this company registered an increase in hedge fund sentiment, as the number of investors from our database long the stock went up to 51 from 44. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Comcast Corporation (NASDAQ:CMCSA), Philip Morris International Inc. (NYSE:PM), and Medtronic, Inc. (NYSE:MDT) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s take a peek at the new action encompassing The Walt Disney Company (NYSE:DIS).
Hedge fund activity in The Walt Disney Company (NYSE:DIS)
As stated earlier, a total of 51 funds tracked by Insider Monkey held long positions in The Walt Disney Company, up by 16% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Lansdowne Partners, managed by Alex Snow, holds the most valuable position in The Walt Disney Company (NYSE:DIS). Lansdowne Partners has a $890.4 million position in the stock, comprising 7.7% of its 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, which holds a $810 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other peers with similar optimism include D. E. Shaw’s D E Shaw, Jim Simons’ Renaissance Technologies, and Ric Dillon’s Diamond Hill Capital.
Now, key money managers have been driving this bullishness. Citadel Investment Group, founded by Ken Griffin, created the biggest call position in The Walt Disney Company (NYSE:DIS). Citadel Investment Group had $126.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $82.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Larry Petrellaáand Michael Siminerio’s PineView Asset Management, Adam Weiss’ Stillwater Investment Management, and Sander Gerber’s Hudson Bay Capital Management.
Let’s now review hedge fund activity in other stocks similar to The Walt Disney Company (NYSE:DIS). We will take a look at Comcast Corporation (NASDAQ:CMCSA), Philip Morris International Inc. (NYSE:PM), Medtronic, Inc. (NYSE:MDT), and Intel Corporation (NASDAQ:INTC). This group of stocks’ market valuations match DIS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMCSA | 83 | 8162514 | -5 |
| PM | 45 | 4516843 | -2 |
| MDT | 43 | 1294020 | -7 |
| INTC | 68 | 4883403 | 11 |
As you can see these stocks had an average of 60 funds with bullish positions and the average amount invested in these stocks was $4.71 billion, which compares with the $3.80 billion in DIS’s case. Comcast Corporation (NASDAQ:CMCSA) is the most popular stock in this table. On the other hand, Medtronic, Inc. (NYSE:MDT) is the least popular one with only 43 bullish hedge fund positions. The Walt Disney Company (NYSE:DIS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Comcast Corporation (NASDAQ:CMCSA) might be a better candidate to consider a long position.
