The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Dell Technologies Inc. (NYSE:DELL) based on those filings.
Is DELL a good stock to buy now? Investors who are in the know were in a bearish mood. The number of bullish hedge fund positions dropped by 7 lately. Dell Technologies Inc. (NYSE:DELL) was in 43 hedge funds’ portfolios at the end of September. The all time high for this statistic is 86. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now we’re going to take a gander at the fresh hedge fund action regarding Dell Technologies Inc. (NYSE:DELL).
Do Hedge Funds Think DELL Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 47 hedge funds with a bullish position in DELL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Elliott Investment Management, managed by Paul Singer, holds the number one position in Dell Technologies Inc. (NYSE:DELL). Elliott Investment Management has a $1.6317 billion position in the stock, comprising 17.1% of its 13F portfolio. The second largest stake is held by Joshua Friedman and Mitchell Julis of Canyon Capital Advisors, with a $487.4 million position; 18.1% of its 13F portfolio is allocated to the company. Other peers that hold long positions encompass Andrew Wellington and Jeff Keswin’s Lyrical Asset Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to Dell Technologies Inc. (NYSE:DELL), around 33.57% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, setting aside 18.1 percent of its 13F equity portfolio to DELL.
Since Dell Technologies Inc. (NYSE:DELL) has faced a decline in interest from the smart money, logic holds that there exists a select few funds that slashed their full holdings by the end of the third quarter. Interestingly, Andy Redleaf’s Whitebox Advisors said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, valued at close to $28.4 million in stock, and David Rosen’s Rubric Capital Management was right behind this move, as the fund sold off about $26.1 million worth. These moves are important to note, as total hedge fund interest fell by 7 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Dell Technologies Inc. (NYSE:DELL) but similarly valued. We will take a look at Kimberly Clark Corporation (NYSE:KMB), The Bank of Nova Scotia (NYSE:BNS), Barrick Gold Corporation (NYSE:GOLD), Brookfield Asset Management Inc. (NYSE:BAM), Edwards Lifesciences Corporation (NYSE:EW), China Petroleum & Chemical Corp (NYSE:SNP), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks’ market values match DELL’s market value.
|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 35.9 hedge funds with bullish positions and the average amount invested in these stocks was $1343 million. That figure was $3764 million in DELL’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 8 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DELL is 50.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately DELL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DELL were disappointed as the stock returned 6.2% since the end of September (through 12/8) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.