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 Cisco Systems, Inc. (NASDAQ:CSCO).
Cisco Systems, Inc. (NASDAQ:CSCO) investors should be aware of an increase in hedge fund interest in recent months. Cisco Systems, Inc. (NASDAQ:CSCO) was in 63 hedge funds’ portfolios at the end of September. The all time high for this statistic is 68. Our calculations also showed that CSCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding Cisco Systems, Inc. (NASDAQ:CSCO).
Do Hedge Funds Think CSCO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2021. On the other hand, there were a total of 59 hedge funds with a bullish position in CSCO a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cisco Systems, Inc. (NASDAQ:CSCO) was held by Fisher Asset Management, which reported holding $1242.6 million worth of stock at the end of September. It was followed by Generation Investment Management with a $1041.2 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position Breakline Capital allocated the biggest weight to Cisco Systems, Inc. (NASDAQ:CSCO), around 5.74% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, dishing out 4.33 percent of its 13F equity portfolio to CSCO.
As aggregate interest increased, key hedge funds were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, established the most outsized call position in Cisco Systems, Inc. (NASDAQ:CSCO). Laurion Capital Management had $139.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $56.1 million position during the quarter. The other funds with brand new CSCO positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cisco Systems, Inc. (NASDAQ:CSCO) but similarly valued. These stocks are The Coca-Cola Company (NYSE:KO), Thermo Fisher Scientific Inc. (NYSE:TMO), Verizon Communications Inc. (NYSE:VZ), Eli Lilly and Company (NYSE:LLY), Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), and Intel Corporation (NASDAQ:INTC). This group of stocks’ market values are closest to CSCO’s market value.
|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 63 hedge funds with bullish positions and the average amount invested in these stocks was $9352 million. That figure was $3938 million in CSCO’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Novo Nordisk A/S (NYSE:NVO) is the least popular one with only 27 bullish hedge fund positions. Cisco Systems, Inc. (NASDAQ:CSCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CSCO is 62.7. 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. 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 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately CSCO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CSCO investors were disappointed as the stock returned 1.4% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.