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Here is What Hedge Funds Think About Telefonaktiebolaget LM Ericsson (ERIC)

Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) shareholders have witnessed an increase in enthusiasm from smart money in recent months. ERIC was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 13 hedge funds in our database with ERIC positions at the end of the previous quarter. Our calculations also showed that ERIC isn’t among the 30 most popular stocks among hedge funds.

According to most investors, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are greater than 8000 funds trading at present, We choose to focus on the elite of this group, approximately 750 funds. Most estimates calculate that this group of people preside over most of the smart money’s total asset base, and by keeping an eye on their inimitable picks, Insider Monkey has found numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

RENAISSANCE TECHNOLOGIES

Let’s analyze the latest hedge fund action encompassing Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC).

What does the smart money think about Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC)?

At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 92% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ERIC over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ERIC_mar2019

The largest stake in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) was held by Renaissance Technologies, which reported holding $137.4 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $90 million position. Other investors bullish on the company included Millennium Management, Cavalry Asset Management, and Tairen Capital.

As aggregate interest increased, specific money managers have been driving this bullishness. Cavalry Asset Management, managed by John Hurley, assembled the largest position in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). Cavalry Asset Management had $39.9 million invested in the company at the end of the quarter. Larry Chen and Terry Zhang’s Tairen Capital also made a $22.6 million investment in the stock during the quarter. The following funds were also among the new ERIC investors: Mark Moore’s ThornTree Capital Partners, Dipak Patel’s Alight Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now review hedge fund activity in other stocks similar to Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). These stocks are Nutrien Ltd. (NYSE:NTR), Yum! Brands, Inc. (NYSE:YUM), The Allstate Corporation (NYSE:ALL), and Dollar General Corp. (NYSE:DG). All of these stocks’ market caps resemble ERIC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTR 32 934261 -3
YUM 34 1304086 4
ALL 34 1767647 0
DG 30 1295630 -1
Average 32.5 1325406 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1325 million. That figure was $439 million in ERIC’s case. Yum! Brands, Inc. (NYSE:YUM) is the most popular stock in this table. On the other hand Dollar General Corp. (NYSE:DG) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) is even less popular than DG. So, even though there is a big move in the positive direction, overall hedge fund sentiment is still negative. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately ERIC wasn’t in this group. Hedge funds that bet on ERIC were disappointed as the stock returned 8.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.

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

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