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Are Hedge Funds Going To Get Burned By DXC Technology Company (DXC) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider DXC Technology Company (NYSE:DXC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

DXC Technology Company (NYSE:DXC) has experienced an increase in hedge fund interest lately. DXC was in 46 hedge funds’ portfolios at the end of the first quarter of 2019. There were 43 hedge funds in our database with DXC positions at the end of the previous quarter. Our calculations also showed that dxc isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a multitude of tools market participants employ to appraise publicly traded companies. A pair of the less utilized tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the S&P 500 by a very impressive amount (see the details here).

GLENVIEW CAPITAL

We’re going to view the new hedge fund action surrounding DXC Technology Company (NYSE:DXC).

What does the smart money think about DXC Technology Company (NYSE:DXC)?

Heading into the second quarter of 2019, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DXC over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with DXC Positions

More specifically, Glenview Capital was the largest shareholder of DXC Technology Company (NYSE:DXC), with a stake worth $707 million reported as of the end of March. Trailing Glenview Capital was Maverick Capital, which amassed a stake valued at $344.5 million. AQR Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, key hedge funds have been driving this bullishness. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, initiated the largest position in DXC Technology Company (NYSE:DXC). Wexford Capital had $3.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new DXC investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., William B. Gray’s Orbis Investment Management, and Minhua Zhang’s Weld Capital Management.

Let’s also examine hedge fund activity in other stocks similar to DXC Technology Company (NYSE:DXC). We will take a look at Synopsys, Inc. (NASDAQ:SNPS), NetApp Inc. (NASDAQ:NTAP), Teva Pharmaceutical Industries Limited (NYSE:TEVA), and Yum China Holdings, Inc. (NYSE:YUMC). All of these stocks’ market caps are similar to DXC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNPS 31 1562669 -3
NTAP 24 973282 3
TEVA 32 1713411 -3
YUMC 30 478911 4
Average 29.25 1182068 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $1182 million. That figure was $2103 million in DXC’s case. Teva Pharmaceutical Industries Limited (NYSE:TEVA) is the most popular stock in this table. On the other hand NetApp Inc. (NASDAQ:NTAP) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks DXC Technology Company (NYSE:DXC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately DXC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DXC were disappointed as the stock returned -23.2% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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