Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Relx PLC (NYSE:RELX).
Relx PLC (NYSE:RELX) has experienced an increase in enthusiasm from smart money in recent months. RELX was in 7 hedge funds’ portfolios at the end of December. There were 6 hedge funds in our database with RELX holdings at the end of the previous quarter. Our calculations also showed that RELX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are viewed as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds trading today, Our researchers look at the moguls of this group, about 850 funds. These investment experts control bulk of the smart money’s total capital, and by keeping track of their unrivaled investments, Insider Monkey has brought to light several investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
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 read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s check out the new hedge fund action encompassing Relx PLC (NYSE:RELX).
Hedge fund activity in Relx PLC (NYSE:RELX)
Heading into the first quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in RELX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in Relx PLC (NYSE:RELX), worth close to $75.1 million, comprising 0.1% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $14.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and Ronald Hua’s Qtron Investments. In terms of the portfolio weights assigned to each position Qtron Investments allocated the biggest weight to Relx PLC (NYSE:RELX), around 0.19% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to RELX.
Now, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest position in Relx PLC (NYSE:RELX). Balyasny Asset Management had $0.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $0.1 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Relx PLC (NYSE:RELX). We will take a look at ICICI Bank Limited (NYSE:IBN), Illumina, Inc. (NASDAQ:ILMN), EOG Resources Inc (NYSE:EOG), and Edwards Lifesciences Corporation (NYSE:EW). This group of stocks’ market values are similar to RELX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBN | 29 | 1107865 | 1 |
| ILMN | 43 | 1121339 | 3 |
| EOG | 43 | 1486121 | -10 |
| EW | 45 | 1283127 | 9 |
| Average | 40 | 1249613 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $1250 million. That figure was $99 million in RELX’s case. Edwards Lifesciences Corporation (NYSE:EW) is the most popular stock in this table. On the other hand ICICI Bank Limited (NYSE:IBN) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Relx PLC (NYSE:RELX) is even less popular than IBN. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but managed to beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on RELX, though not to the same extent, as the stock returned -14.2% during the same time period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
