Here is What Hedge Funds Think About Taiwan Semiconductor Mfg. Co. Ltd. (TSM)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) changed recently.

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) has seen an increase in activity from the world’s largest hedge funds in recent months. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) was in 67 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 76. Our calculations also showed that TSM 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. With all of this in mind let’s go over the latest hedge fund action encompassing Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).


Cliff Asness of AQR Capital Management

Do Hedge Funds Think TSM Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 67 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TSM over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) was held by Fisher Asset Management, which reported holding $2833.6 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $1189.1 million position. Other investors bullish on the company included GQG Partners, AQR Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), around 30.63% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, designating 7.21 percent of its 13F equity portfolio to TSM.

As one would reasonably expect, specific money managers were leading the bulls’ herd. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, established the most valuable position in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). LMR Partners had $49.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $41 million investment in the stock during the quarter. The other funds with brand new TSM positions are Brandon Haley’s Holocene Advisors, Campbell Wilson’s Old Well Partners, and Jonathan Lourie and Stuart Fiertz’s Cheyne Capital.

Let’s go over hedge fund activity in other stocks similar to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). We will take a look at NVIDIA Corporation (NASDAQ:NVDA), JPMorgan Chase & Co. (NYSE:JPM), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), and UnitedHealth Group Inc. (NYSE:UNH). All of these stocks’ market caps are similar to TSM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVDA 83 10050216 -3
JPM 101 5635067 -7
V 143 26169435 -19
JNJ 88 6871782 0
BABA 115 10201096 -31
WMT 71 7932562 0
UNH 95 11705313 -10
Average 99.4 11223639 -10

View table here if you experience formatting issues.

As you can see these stocks had an average of 99.4 hedge funds with bullish positions and the average amount invested in these stocks was $11224 million. That figure was $9511 million in TSM’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 71 bullish hedge fund positions. Compared to these stocks Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is even less popular than WMT. Our overall hedge fund sentiment score for TSM is 34.4. 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. Hedge funds dodged a bullet by taking a bearish stance towards TSM. Our calculations showed that the top 5 most popular hedge fund stocks 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 but managed to beat the market again by 5.6 percentage points. Unfortunately TSM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); TSM investors were disappointed as the stock returned 4.9% since the end of the third quarter (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 since 2019.

Follow Taiwan Semiconductor Mfg Co Ltd (NYSE:TSM)

Suggested Articles:

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