How International Business Machines Corp. (IBM) Stacks Up Against Its Peers

Before we spend many hours researching a company, we like to analyze what hedge funds and billionaire investors think of the stock first. We like to do so because elite investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double-digits. Although the elite funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of International Business Machines Corp. (NYSE:IBM).

International Business Machines Corp. (NYSE:IBM) has experienced an increase in activity from the world’s largest hedge funds lately. Heading into the fourth quarter of 2016, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a 4% increase from the previous quarter. At the end of this article we will also compare IBM to other stocks including Unilever plc (ADR) (NYSE:UL), Cisco Systems, Inc. (NASDAQ:CSCO), and Unilever N.V. (ADR) (NYSE:UN) to get a better sense of its popularity.

Hedge fund activity in International Business Machines Corp. (NYSE:IBM)

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the most valuable position in International Business Machines Corp. (NYSE:IBM). Berkshire Hathaway has a $12.90 billion position in the stock, comprising 10% of its 13F portfolio. On Berkshire Hathaway’s heels is Masters Capital Management, led by Mike Masters, holding a $317.7 million call position; 6.4% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Prem Watsa’s Fairfax Financial Holdings, Phill Gross and Robert Atchinson’s Adage Capital Management, and Cliff Asness’ AQR Capital Management.

Consequently, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the biggest call position in International Business Machines Corp. (NYSE:IBM). Citadel Investment Group had $115.7 million invested in the position at the end of the quarter. Israel Englander’s Millennium Management also initiated a $20.9 million position during the third quarter. The other funds with brand new IBM positions are Ray Dalio’s Bridgewater Associates, Ed Beddow and William Tichy’s Beddow Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now review hedge fund activity in other stocks similar to International Business Machines Corp. (NYSE:IBM). These stocks are Unilever plc (ADR) (NYSE:UL), Cisco Systems, Inc. (NASDAQ:CSCO), Unilever N.V. (ADR) (NYSE:UN), and Novo Nordisk A/S (ADR) (NYSE:NVO). This group of stocks’ market caps match IBM’s market cap.

As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.76 billion. That figure was $14.65 billion in IBM’s case. Cisco Systems, Inc. (NASDAQ:CSCO) is the most popular stock in this table. On the other hand Unilever plc (ADR) (NYSE:UL) is the least popular one with only 10 bullish hedge fund positions. International Business Machines Corp. (NYSE:IBM) is not the most popular stock in this group but hedge fund interest is still above average and it has far more money invested in it than any of the other stocks, thanks to Warren Buffett’s huge position. This is a positive signal, and given the rising hedge fund ownership, it may be worth taking a look at IBM right now.

Disclosure: None