Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 28th, 2019. What do these smart investors think about The Walt Disney Company (NYSE:DIS)?
Even though The Walt Disney Company (NYSE:DIS) shareholders have witnessed a decrease in support from the world’s most elite money managers recently, our calculations still showed that DIS ranks 8th among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the latest hedge fund action regarding The Walt Disney Company (NYSE:DIS).
Hedge fund activity in The Walt Disney Company (NYSE:DIS)
Heading into the third quarter of 2019, a total of 113 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from one quarter earlier. By comparison, 52 hedge funds held shares or bullish call options in DIS a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Yacktman Asset Management was the largest shareholder of The Walt Disney Company (NYSE:DIS), with a stake worth $612.4 million reported as of the end of March. Trailing Yacktman Asset Management was Citadel Investment Group, which amassed a stake valued at $590 million. D1 Capital Partners, Point72 Asset Management, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Since The Walt Disney Company (NYSE:DIS) has experienced a decline in interest from the smart money, it’s safe to say that there was a specific group of hedgies that elected to cut their entire stakes by the end of the second quarter. It’s worth mentioning that Andreas Halvorsen’s Viking Global said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $241.2 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $226 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds by the end of the second quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Walt Disney Company (NYSE:DIS) but similarly valued. These stocks are AT&T Inc. (NYSE:T), Pfizer Inc. (NYSE:PFE), Verizon Communications Inc. (NYSE:VZ), and Cisco Systems, Inc. (NASDAQ:CSCO). This group of stocks’ market caps are similar to DIS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.75 hedge funds with bullish positions and the average amount invested in these stocks was $2830 million. That figure was $6387 million in DIS’s case. Cisco Systems, Inc. (NASDAQ:CSCO) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE:T) is the least popular one with only 42 bullish hedge fund positions. Compared to these stocks The Walt Disney Company (NYSE:DIS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately DIS wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on DIS were disappointed as the stock returned -6.1% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.