Hedge Funds Cashing Out Of Vodafone Group Plc (VOD)

In this article you are going to find out whether hedge funds think Vodafone Group Plc (NASDAQ:VOD) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Vodafone Group Plc (NASDAQ:VOD) ready to rally soon? Hedge funds are selling. The number of long hedge fund positions shrunk by 2 in recent months. Our calculations also showed that VOD 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).

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

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Rudolph Kluiber of GRT Capital Partners

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. With all of this in mind let’s take a peek at the fresh hedge fund action regarding Vodafone Group Plc (NASDAQ:VOD).

How are hedge funds trading Vodafone Group Plc (NASDAQ:VOD)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in VOD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Vodafone Group Plc (NASDAQ:VOD) was held by Renaissance Technologies, which reported holding $497.7 million worth of stock at the end of September. It was followed by Levin Easterly Partners with a $43.7 million position. Other investors bullish on the company included Arrowstreet Capital, GoldenTree Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position GoldenTree Asset Management allocated the biggest weight to Vodafone Group Plc (NASDAQ:VOD), around 2.02% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, setting aside 1.94 percent of its 13F equity portfolio to VOD.

Because Vodafone Group Plc (NASDAQ:VOD) has experienced falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that decided to sell off their positions entirely in the first quarter. Intriguingly, Simon Sadler’s Segantii Capital sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling about $20.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $3.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Vodafone Group Plc (NASDAQ:VOD). These stocks are ABB Ltd (NYSE:ABB), Newmont Corporation (NYSE:NEM), Raytheon Company (NYSE:RTN), and Ambev SA (NYSE:ABEV). This group of stocks’ market values are similar to VOD’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABB 10 277115 0
NEM 43 1023580 9
RTN 51 1829093 -2
ABEV 9 254473 -5
Average 28.25 846065 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $846 million. That figure was $599 million in VOD’s case. Raytheon Company (NYSE:RTN) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 9 bullish hedge fund positions. Vodafone Group Plc (NASDAQ:VOD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately VOD wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VOD investors were disappointed as the stock returned 18.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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