Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 DXC Technology Company (NYSE:DXC).
Is DXC Technology Company (NYSE:DXC) the right investment to pursue these days? The smart money was cutting their exposure. The number of long hedge fund positions were cut by 11 in recent months. DXC Technology Company (NYSE:DXC) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 60. Our calculations also showed that DXC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the eyes of most traders, hedge funds are assumed to be slow, outdated financial tools of the past. While there are greater than 8000 funds with their doors open at present, Our researchers look at the aristocrats of this club, approximately 850 funds. These hedge fund managers control bulk of all hedge funds’ total capital, and by shadowing their matchless investments, Insider Monkey has found many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
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Do Hedge Funds Think DXC Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DXC over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in DXC Technology Company (NYSE:DXC) was held by Glenview Capital, which reported holding $330.8 million worth of stock at the end of December. It was followed by Point72 Asset Management with a $235 million position. Other investors bullish on the company included Miller Value Partners, Arrowstreet Capital, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Glenview Capital allocated the biggest weight to DXC Technology Company (NYSE:DXC), around 5.6% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, dishing out 4.24 percent of its 13F equity portfolio to DXC.
Judging by the fact that DXC Technology Company (NYSE:DXC) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that slashed their positions entirely by the end of the first quarter. Intriguingly, Renaissance Technologies dropped the largest stake of the 750 funds tracked by Insider Monkey, worth about $15.6 million in stock. Robert Pohly’s fund, Samlyn Capital, also said goodbye to its stock, about $13.9 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 11 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to DXC Technology Company (NYSE:DXC). We will take a look at Syneos Health, Inc. (NASDAQ:SYNH), Federal Realty Investment Trust (NYSE:FRT), Voya Financial Inc (NYSE:VOYA), Luminar Technologies, Inc. (NASDAQ:LAZR), ITT Inc. (NYSE:ITT), Jabil Inc. (NYSE:JBL), and Yatsen Holding Limited (NYSE:YSG). This group of stocks’ market values resemble DXC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYNH | 28 | 460253 | -1 |
| FRT | 16 | 43276 | -1 |
| VOYA | 42 | 1031020 | -2 |
| LAZR | 12 | 39243 | -13 |
| ITT | 18 | 264004 | -10 |
| JBL | 24 | 466622 | -4 |
| YSG | 20 | 224997 | -6 |
| Average | 22.9 | 361345 | -5.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $361 million. That figure was $1058 million in DXC’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Luminar Technologies, Inc. (NASDAQ:LAZR) is the least popular one with only 12 bullish hedge fund positions. DXC Technology Company (NYSE:DXC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DXC is 34.7. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on DXC as the stock returned 27.1% since the end of Q1 (through 7/9) 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.
