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Is America Movil SAB de CV (AMX) Going to Burn These Hedge Funds?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like America Movil SAB de CV (NYSE:AMX).

Hedge fund interest in America Movil SAB de CV (NYSE:AMX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AMX to other stocks including Equinix Inc (NASDAQ:EQIX), Air Products & Chemicals, Inc. (NYSE:APD), and Kimberly Clark Corporation (NYSE:KMB) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Gifford Combs - Dalton Investments

Gifford Combs of Dalton Investments

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the new hedge fund action surrounding America Movil SAB de CV (NYSE:AMX).

How have hedgies been trading America Movil SAB de CV (NYSE:AMX)?

Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AMX over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in America Movil SAB de CV (NYSE:AMX), worth close to $127.1 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund is Renaissance Technologies, with a $39.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Israel Englander’s Millennium Management, David Kowitz and Sheldon Kasowitz’s Indus Capital and Gifford Combs’s Dalton Investments. In terms of the portfolio weights assigned to each position Dalton Investments allocated the biggest weight to America Movil SAB de CV (NYSE:AMX), around 2.29% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, earmarking 0.64 percent of its 13F equity portfolio to AMX.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bailard Inc. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).

Let’s now take a look at hedge fund activity in other stocks similar to America Movil SAB de CV (NYSE:AMX). We will take a look at Equinix, Inc. (REIT) (NASDAQ:EQIX), Air Products & Chemicals, Inc. (NYSE:APD), Kimberly Clark Corporation (NYSE:KMB), and Waste Management, Inc. (NYSE:WM). All of these stocks’ market caps are similar to AMX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EQIX 33 1580931 -5
APD 38 478746 6
KMB 40 1622264 0
WM 46 3533060 11
Average 39.25 1803750 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.25 hedge funds with bullish positions and the average amount invested in these stocks was $1804 million. That figure was $189 million in AMX’s case. Waste Management, Inc. (NYSE:WM) is the most popular stock in this table. On the other hand Equinix Inc (NASDAQ:EQIX) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks America Movil SAB de CV (NYSE:AMX) is even less popular than EQIX. Hedge funds dodged a bullet by taking a bearish stance towards AMX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AMX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AMX investors were disappointed as the stock returned 4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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

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