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Hedge Funds Are Souring On Ford Motor Company (F)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Ford Motor Company (NYSE:F).

Is Ford Motor Company (NYSE:F) a bargain? Money managers are turning less bullish. The number of long hedge fund bets decreased by 3 lately. Our calculations also showed that F isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). F was in 33 hedge funds’ portfolios at the end of March. There were 36 hedge funds in our database with F holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action regarding Ford Motor Company (NYSE:F).

What have hedge funds been doing with Ford Motor Company (NYSE:F)?

Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in F 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.

More specifically, Pzena Investment Management was the largest shareholder of Ford Motor Company (NYSE:F), with a stake worth $246.8 million reported as of the end of September. Trailing Pzena Investment Management was Greenhaven Associates, which amassed a stake valued at $165.4 million. Arrowstreet Capital, Alkeon Capital Management, and Millennium Management 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 Greenhaven Associates allocated the biggest weight to Ford Motor Company (NYSE:F), around 6.15% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, dishing out 1.92 percent of its 13F equity portfolio to F.

Because Ford Motor Company (NYSE:F) has faced a decline in interest from the smart money, it’s easy to see that there was a specific group of fund managers who were dropping their entire stakes heading into Q4. It’s worth mentioning that Renaissance Technologies said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, comprising close to $49.5 million in stock. Ryan Caldwell’s fund, Chiron Investment Management, also dropped its stock, about $17.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ford Motor Company (NYSE:F) but similarly valued. We will take a look at Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK), STMicroelectronics N.V. (NYSE:STM), PPL Corporation (NYSE:PPL), and Hilton Worldwide Holdings Inc (NYSE:HLT). All of these stocks’ market caps resemble F’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TLK 7 151891 -1
STM 11 70106 -6
PPL 28 311688 -4
HLT 43 3133178 -14
Average 22.25 916716 -6.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $917 million. That figure was $667 million in F’s case. Hilton Worldwide Holdings Inc (NYSE:HLT) is the most popular stock in this table. On the other hand Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK) is the least popular one with only 7 bullish hedge fund positions. Ford Motor Company (NYSE:F) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on F, though not to the same extent, as the stock returned 18.2% during the first two months of the second quarter and outperformed the market as well.

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

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