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Is Commscope Holding Company Inc (COMM) Going to Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Commscope Holding Company Inc (NASDAQ:COMM) based on that data.

Is Commscope Holding Company Inc (NASDAQ:COMM) a healthy stock for your portfolio? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions decreased by 3 recently. Our calculations also showed that COMM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). COMM was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. There were 29 hedge funds in our database with COMM positions at the end of the previous quarter.

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Brown Hawk Ridge Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the key hedge fund action regarding Commscope Holding Company Inc (NASDAQ:COMM).

How have hedgies been trading Commscope Holding Company Inc (NASDAQ:COMM)?

Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COMM over the last 18 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.

Is COMM A Good Stock To Buy?

More specifically, Maverick Capital was the largest shareholder of Commscope Holding Company Inc (NASDAQ:COMM), with a stake worth $176.1 million reported as of the end of September. Trailing Maverick Capital was FPR Partners, which amassed a stake valued at $150.7 million. Lyrical Asset Management, Adage Capital Management, and Levin Easterly Partners 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 Shelter Haven Capital Management allocated the biggest weight to Commscope Holding Company Inc (NASDAQ:COMM), around 13.1% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, dishing out 6.2 percent of its 13F equity portfolio to COMM.

Seeing as Commscope Holding Company Inc (NASDAQ:COMM) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there was a specific group of money managers that elected to cut their full holdings by the end of the first quarter. At the top of the heap, David Brown’s Hawk Ridge Management sold off the largest investment of the 750 funds watched by Insider Monkey, worth an estimated $41.2 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $5.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Commscope Holding Company Inc (NASDAQ:COMM) but similarly valued. These stocks are Healthcare Services Group, Inc. (NASDAQ:HCSG), Ballard Power Systems Inc. (NASDAQ:BLDP), KB Home (NYSE:KBH), and Applied Industrial Technologies (NYSE:AIT). This group of stocks’ market valuations resemble COMM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HCSG 20 87235 2
BLDP 10 21232 4
KBH 25 291267 -4
AIT 14 35993 -8
Average 17.25 108932 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $597 million in COMM’s case. KB Home (NYSE:KBH) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Commscope Holding Company Inc (NASDAQ:COMM) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately COMM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on COMM were disappointed as the stock returned 13.2% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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