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 at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Verizon Communications Inc. (NYSE:VZ) and determine whether the smart money was really smart about this stock.
Verizon Communications Inc. (NYSE:VZ) was in 57 hedge funds’ portfolios at the end of September. The all time high for this statistic is 69. VZ shareholders have witnessed a decrease in hedge fund sentiment of late. There were 63 hedge funds in our database with VZ positions at the end of the second quarter. Our calculations also showed that VZ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a glance at the new hedge fund action encompassing Verizon Communications Inc. (NYSE:VZ).
Ian Wace of Marshall Wace
Do Hedge Funds Think VZ Is A Good Stock To Buy Now?
At Q3’s end, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the second quarter of 2021. By comparison, 65 hedge funds held shares or bullish call options in VZ a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the most valuable position in Verizon Communications Inc. (NYSE:VZ), worth close to $8.5781 billion, corresponding to 2.9% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $292.9 million call position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Jaime Sterne’s Skye Global Management, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to Verizon Communications Inc. (NYSE:VZ), around 8.69% of its 13F portfolio. Skye Global Management is also relatively very bullish on the stock, designating 4.74 percent of its 13F equity portfolio to VZ.
Since Verizon Communications Inc. (NYSE:VZ) has faced falling interest from hedge fund managers, logic holds that there were a few fund managers that decided to sell off their entire stakes heading into Q4. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital cut the largest position of all the hedgies watched by Insider Monkey, totaling close to $241.5 million in stock. Bernard Horn’s fund, Polaris Capital Management, also dumped its stock, about $33.1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Verizon Communications Inc. (NYSE:VZ) but similarly valued. We will take a look at Eli Lilly and Company (NYSE:LLY), Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NASDAQ:PEP), and Accenture Plc (NYSE:ACN). All of these stocks’ market caps resemble VZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LLY | 62 | 4287033 | -2 |
| NVO | 27 | 4053265 | 7 |
| DHR | 74 | 6946837 | -4 |
| INTC | 66 | 6472854 | -12 |
| ABT | 63 | 3611527 | 2 |
| PEP | 61 | 4435441 | -5 |
| ACN | 56 | 4460650 | 4 |
| Average | 58.4 | 4895372 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 58.4 hedge funds with bullish positions and the average amount invested in these stocks was $4895 million. That figure was $10359 million in VZ’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand Novo Nordisk A/S (NYSE:NVO) is the least popular one with only 27 bullish hedge fund positions. Verizon Communications Inc. (NYSE:VZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VZ is 55.7. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on VZ as the stock returned 0.9% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
