Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Dell Technologies Inc. (NYSE:DELL) changed recently.
Is Dell Technologies Inc. (NYSE:DELL) undervalued? Hedge funds were getting more bullish. The number of bullish hedge fund positions inched up by 8 in recent months. Dell Technologies Inc. (NYSE:DELL) was in 62 hedge funds’ portfolios at the end of June. The all time high for this statistic is 86. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 54 hedge funds in our database with DELL positions at the end of the first quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Singer of Elliott Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium 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. With all of this in mind we’re going to take a look at the latest hedge fund action encompassing Dell Technologies Inc. (NYSE:DELL).
Do Hedge Funds Think DELL Is A Good Stock To Buy Now?
At Q2’s end, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DELL over the last 24 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Elliott Investment Management, managed by Paul Singer, holds the number one position in Dell Technologies Inc. (NYSE:DELL). Elliott Investment Management has a $2.4751 billion position in the stock, comprising 19% of its 13F portfolio. The second largest stake is held by Lyrical Asset Management, led by Andrew Wellington and Jeff Keswin, holding a $460.9 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Dan Loeb’s Third Point. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to Dell Technologies Inc. (NYSE:DELL), around 25.13% of its 13F portfolio. Engine Capital is also relatively very bullish on the stock, setting aside 23.06 percent of its 13F equity portfolio to DELL.
As one would reasonably expect, some big names have jumped into Dell Technologies Inc. (NYSE:DELL) headfirst. Antara Capital, managed by Himanshu Gulati, established the most outsized call position in Dell Technologies Inc. (NYSE:DELL). Antara Capital had $74.8 million invested in the company at the end of the quarter. Benjamin Pass’s TOMS Capital also made a $61.6 million investment in the stock during the quarter. The following funds were also among the new DELL investors: Amit Nitin Doshi’s Harbor Spring Capital, Dmitry Balyasny’s Balyasny Asset Management, and Himanshu Gulati’s Antara Capital.
Let’s go over hedge fund activity in other stocks similar to Dell Technologies Inc. (NYSE:DELL). These stocks are Duke Energy Corporation (NYSE:DUK), Canadian National Railway Company (NYSE:CNI), Truist Financial Corporation (NYSE:TFC), Activision Blizzard, Inc. (NASDAQ:ATVI), CSX Corporation (NASDAQ:CSX), The Sherwin-Williams Company (NYSE:SHW), and Coupang, Inc. (NYSE:CPNG). This group of stocks’ market values match DELL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DUK | 36 | 566143 | 2 |
| CNI | 40 | 5310284 | 4 |
| TFC | 39 | 1019267 | 3 |
| ATVI | 78 | 3651606 | 2 |
| CSX | 56 | 4223857 | 3 |
| SHW | 49 | 2028984 | -2 |
| CPNG | 33 | 18042813 | -7 |
| Average | 47.3 | 4977565 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.3 hedge funds with bullish positions and the average amount invested in these stocks was $4978 million. That figure was $5601 million in DELL’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 33 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DELL is 63.9. 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on DELL as the stock returned 10.4% since the end of Q2 (through 10/29) 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.
