Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is DXC Technology Company (NYSE:DXC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is DXC Technology Company (NYSE:DXC) a buy, sell, or hold? Money managers are getting less optimistic. The number of long hedge fund positions went down by 7 in recent months. Our calculations also showed that DXC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). DXC was in 34 hedge funds’ portfolios at the end of September. There were 41 hedge funds in our database with DXC positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of methods investors employ to analyze their holdings. Two of the less utilized methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top money managers can beat the S&P 500 by a significant margin (see the details here).
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the recent hedge fund action regarding DXC Technology Company (NYSE:DXC).
What have hedge funds been doing with DXC Technology Company (NYSE:DXC)?
Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DXC over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Glenview Capital was the largest shareholder of DXC Technology Company (NYSE:DXC), with a stake worth $348 million reported as of the end of September. Trailing Glenview Capital was Maverick Capital, which amassed a stake valued at $323.3 million. AQR Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to DXC Technology Company (NYSE:DXC), around 16.9% of its portfolio. Clearline Capital is also relatively very bullish on the stock, setting aside 12.23 percent of its 13F equity portfolio to DXC.
Since DXC Technology Company (NYSE:DXC) has faced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings heading into Q4. Interestingly, Paul Singer’s Elliott Management cut the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $121.3 million in stock, and David Gallo’s Valinor Management was right behind this move, as the fund dropped about $60.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 7 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to DXC Technology Company (NYSE:DXC). These stocks are Assurant, Inc. (NYSE:AIZ), Graco Inc. (NYSE:GGG), Hyatt Hotels Corporation (NYSE:H), and Fortune Brands Home & Security Inc (NYSE:FBHS). This group of stocks’ market valuations resemble DXC’s market valuation.
|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 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $645 million. That figure was $1145 million in DXC’s case. Fortune Brands Home & Security Inc (NYSE:FBHS) is the most popular stock in this table. On the other hand Graco Inc. (NYSE:GGG) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks DXC Technology Company (NYSE:DXC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on DXC as the stock returned 26.5% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.