Keeping this in mind, let’s analyze whether Broadcom Inc (NASDAQ:AVGO) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Broadcom Inc (NASDAQ:AVGO) was in 59 hedge funds’ portfolios at the end of June. The all time high for this statistics is 83. AVGO investors should be aware of an increase in enthusiasm from smart money lately. There were 50 hedge funds in our database with AVGO positions at the end of the first quarter. Our calculations also showed that AVGO 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.
In the 21st century investor’s toolkit there are a lot of formulas investors employ to size up stocks. A pair of the most useful formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a superb amount (see the details here).
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. With all of this in mind we’re going to take a look at the new hedge fund action encompassing Broadcom Inc (NASDAQ:AVGO).
What have hedge funds been doing with Broadcom Inc (NASDAQ:AVGO)?
At second quarter’s end, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the first quarter of 2020. By comparison, 53 hedge funds held shares or bullish call options in AVGO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, First Pacific Advisors LLC held the most valuable stake in Broadcom Inc (NASDAQ:AVGO), which was worth $415.9 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $370.8 million worth of shares. Lyrical Asset Management, Citadel Investment Group, and Citadel Investment Group 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 Provenire Capital allocated the biggest weight to Broadcom Inc (NASDAQ:AVGO), around 7.94% of its 13F portfolio. Crescent Park Management is also relatively very bullish on the stock, dishing out 5.64 percent of its 13F equity portfolio to AVGO.
Now, some big names have been driving this bullishness. Newbrook Capital Advisors, managed by Robert Boucai, initiated the most outsized position in Broadcom Inc (NASDAQ:AVGO). Newbrook Capital Advisors had $60.1 million invested in the company at the end of the quarter. Renaissance Technologies also made a $32.5 million investment in the stock during the quarter. The other funds with brand new AVGO positions are John Hurley’s Cavalry Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Anthony S. Daffer’s Provenire Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Broadcom Inc (NASDAQ:AVGO) but similarly valued. We will take a look at BHP Group (NYSE:BHP), Danaher Corporation (NYSE:DHR), Medtronic plc (NYSE:MDT), Royal Dutch Shell plc (NYSE:RDS), NextEra Energy, Inc. (NYSE:NEE), Texas Instruments Incorporated (NASDAQ:TXN), and Union Pacific Corporation (NYSE:UNP). This group of stocks’ market valuations are closest to AVGO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.7 hedge funds with bullish positions and the average amount invested in these stocks was $2383 million. That figure was $2379 million in AVGO’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 16 bullish hedge fund positions. Broadcom Inc (NASDAQ:AVGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AVGO is 67.2. 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. 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 29.2% in 2020 through October 16th and still beat the market by 19.7 percentage points. Hedge funds were also right about betting on AVGO as the stock returned 21.1% since the end of Q2 (through 10/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Broadcom Inc. (NASDAQ:AVGO)
Follow Broadcom Inc. (NASDAQ:AVGO)
Disclosure: None. This article was originally published at Insider Monkey.