Commscope Holding Company Inc (COMM) Fell Out Of Favor With Hedge Funds

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Commscope Holding Company Inc (NASDAQ:COMM) makes for a good investment right now.

Commscope Holding Company Inc (NASDAQ:COMM) investors should be aware of a decrease in hedge fund interest lately. Commscope Holding Company Inc (NASDAQ:COMM) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 52. There were 35 hedge funds in our database with COMM positions at the end of the fourth quarter. Our calculations also showed that COMM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Steven Tananbaum - GoldenTree Asset Management

Steven Tananbaum of GoldenTree Asset Management

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. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Commscope Holding Company Inc (NASDAQ:COMM).

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

At first quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in COMM over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, FPR Partners was the largest shareholder of Commscope Holding Company Inc (NASDAQ:COMM), with a stake worth $252.7 million reported as of the end of March. Trailing FPR Partners was Adage Capital Management, which amassed a stake valued at $145.3 million. Lyrical Asset Management, GoldenTree Asset Management, and Brigade Capital 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 FPR Partners allocated the biggest weight to Commscope Holding Company Inc (NASDAQ:COMM), around 6.93% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, dishing out 6.56 percent of its 13F equity portfolio to COMM.

Since Commscope Holding Company Inc (NASDAQ:COMM) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies that elected to cut their positions entirely heading into Q2. At the top of the heap, Steve Cohen’s Point72 Asset Management sold off the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $2.7 million in stock. Noam Gottesman’s fund, GLG Partners, also dumped its stock, about $1.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q2.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Commscope Holding Company Inc (NASDAQ:COMM) but similarly valued. These stocks are Independent Bank Group Inc (NASDAQ:IBTX), Freedom Holding Corp. (NASDAQ:FRHC), Viant Technology Inc. (NASDAQ:DSP), Mr. Cooper Group Inc. (NASDAQ:COOP), VEON Ltd. (NASDAQ:VEON), Michaels Companies Inc (NASDAQ:MIK), and fuboTV Inc. (NYSE:FUBO). This group of stocks’ market values are closest to COMM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBTX 9 74670 -5
FRHC 12 55186 4
DSP 14 70607 14
COOP 24 638610 2
VEON 8 20221 2
MIK 33 573441 0
FUBO 18 207863 -13
Average 16.9 234371 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $758 million in COMM’s case. Michaels Companies Inc (NASDAQ:MIK) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 8 bullish hedge fund positions. Commscope Holding Company Inc (NASDAQ:COMM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COMM is 68.5. 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 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on COMM as the stock returned 39.8% since the end of Q1 (through 7/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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