Comcast Corporation (CMCSA) Fell Out Of Favor With Hedge Funds

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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Comcast Corporation (NASDAQ:CMCSA)?

Is Comcast Corporation (NASDAQ:CMCSA) a buy right now? The best stock pickers were getting less bullish. The number of bullish hedge fund positions were trimmed by 4 recently. Comcast Corporation (NASDAQ:CMCSA) was in 84 hedge funds’ portfolios at the end of June. The all time high for this statistic is 105. Our calculations also showed that CMCSA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Nelson Peltz of Trian Partners

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. Now we’re going to review the latest hedge fund action surrounding Comcast Corporation (NASDAQ:CMCSA).

Do Hedge Funds Think CMCSA Is A Good Stock To Buy Now?

At the end of June, a total of 84 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 80 hedge funds held shares or bullish call options in CMCSA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the biggest position in Comcast Corporation (NASDAQ:CMCSA). Eagle Capital Management has a $1.698 billion position in the stock, comprising 4.8% of its 13F portfolio. Sitting at the No. 2 spot is Nelson Peltz of Trian Partners, with a $1.1859 billion position; the fund has 13.9% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of William B. Gray’s Orbis Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Armitage’s Egerton Capital Limited. In terms of the portfolio weights assigned to each position JNE Partners allocated the biggest weight to Comcast Corporation (NASDAQ:CMCSA), around 23.51% of its 13F portfolio. 3G Sahana Capital Management is also relatively very bullish on the stock, earmarking 17.52 percent of its 13F equity portfolio to CMCSA.

Due to the fact that Comcast Corporation (NASDAQ:CMCSA) has faced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that slashed their entire stakes by the end of the second quarter. At the top of the heap, Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, worth about $429.7 million in stock, and Patrick Degorce’s Theleme Partners was right behind this move, as the fund dumped about $165.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the second quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Comcast Corporation (NASDAQ:CMCSA). We will take a look at Toyota Motor Corporation (NYSE:TM), NIKE, Inc. (NYSE:NKE), Netflix, Inc. (NASDAQ:NFLX), The Coca-Cola Company (NYSE:KO), Verizon Communications Inc. (NYSE:VZ), Intel Corporation (NASDAQ:INTC), and, inc. (NYSE:CRM). This group of stocks’ market valuations are closest to CMCSA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TM 12 903060 -6
NKE 67 6425093 -11
NFLX 113 13216589 3
KO 62 24965786 1
VZ 63 10958091 -6
INTC 78 6764047 -5
CRM 108 11767293 17
Average 71.9 10714280 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 71.9 hedge funds with bullish positions and the average amount invested in these stocks was $10714 million. That figure was $9301 million in CMCSA’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 12 bullish hedge fund positions. Comcast Corporation (NASDAQ:CMCSA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMCSA is 60.6. 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 positive signal but 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 24.1% in 2021 through September 20th and beat the market again by 6.9 percentage points. Unfortunately CMCSA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CMCSA were disappointed as the stock returned -0.5% since the end of June (through 9/20) 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 many of these stocks already outperformed the market since 2019.

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