How Do Hedge Funds Feel About Cisco Systems, Inc. (CSCO)?

In this article we will check out the progression of hedge fund sentiment towards Cisco Systems, Inc. (NASDAQ:CSCO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Cisco Systems, Inc. (NASDAQ:CSCO) was in 60 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 68. CSCO investors should be aware of an increase in enthusiasm from smart money of late. There were 59 hedge funds in our database with CSCO holdings at the end of March. Our calculations also showed that CSCO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Charles Clough of Clough Capital Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the latest hedge fund action encompassing Cisco Systems, Inc. (NASDAQ:CSCO).

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

At second quarter’s end, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CSCO over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Generation Investment Management was the largest shareholder of Cisco Systems, Inc. (NASDAQ:CSCO), with a stake worth $1306.4 million reported as of the end of June. Trailing Generation Investment Management was Fisher Asset Management, which amassed a stake valued at $1181.4 million. AQR Capital Management, Arrowstreet Capital, and Adage Capital Management 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 Generation Investment Management allocated the biggest weight to Cisco Systems, Inc. (NASDAQ:CSCO), around 5.42% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, earmarking 3.55 percent of its 13F equity portfolio to CSCO.

As aggregate interest increased, some big names were breaking ground themselves. Clough Capital Partners, managed by Charles Clough, initiated the most outsized position in Cisco Systems, Inc. (NASDAQ:CSCO). Clough Capital Partners had $22 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $5.7 million position during the quarter. The other funds with brand new CSCO positions are Michael Gelband’s ExodusPoint Capital, Qing Li’s Sciencast Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Cisco Systems, Inc. (NASDAQ:CSCO). We will take a look at Eli Lilly and Company (NYSE:LLY), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NYSE:ORCL), Abbott Laboratories (NYSE:ABT), AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), and PepsiCo, Inc. (NASDAQ:PEP). This group of stocks’ market valuations are closest to CSCO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LLY 64 2994849 9
PFE 67 2356906 2
ORCL 55 2889687 3
ABT 61 4367607 -4
T 68 2896412 5
NVS 22 1798368 3
PEP 66 5193638 5
Average 57.6 3213924 3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 57.6 hedge funds with bullish positions and the average amount invested in these stocks was $3214 million. That figure was $4219 million in CSCO’s case. AT&T Inc. (NYSE:T) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. Cisco Systems, Inc. (NASDAQ:CSCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSCO is 73.8. 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. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on CSCO as the stock returned 6.8% since the end of Q2 (through 9/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Cisco Systems Inc. (NASDAQ:CSCO)

Suggested Articles:

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