Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Ford Motor Company (NYSE:F)? The smart money sentiment can provide an answer to this question.
Is Ford a good stock to buy now? Ford Motor Company (NYSE:F) a bargain? Prominent investors were betting on the stock. The number of bullish hedge fund bets advanced by 8 in recent months. Ford Motor Company (NYSE:F) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. Our calculations also showed that F 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). There were 30 hedge funds in our database with F holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are dozens of gauges shareholders employ to size up their holdings. Two of the most useful gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace their index-focused peers by a significant margin (see the details here).
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. With all of this in mind we’re going to take a peek at the key hedge fund action encompassing Ford Motor Company (NYSE:F).
Do Hedge Funds Think F Is A Good Stock To Buy Now?
At the end of September, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in F a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Ford Motor Company (NYSE:F), which was worth $329.2 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $320.3 million worth of shares. Alkeon Capital Management, Greenhaven Associates, and GLG 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 Key Square Capital Management allocated the biggest weight to Ford Motor Company (NYSE:F), around 3.01% of its 13F portfolio. Greenhaven Associates is also relatively very bullish on the stock, designating 2.8 percent of its 13F equity portfolio to F.
As industrywide interest jumped, some big names were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, created the largest position in Ford Motor Company (NYSE:F). GLG Partners had $86.3 million invested in the company at the end of the quarter. Mike Masters’s Masters Capital Management also initiated a $20 million position during the quarter. The other funds with brand new F positions are Renaissance Technologies, Scott Bessent’s Key Square Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ford Motor Company (NYSE:F) but similarly valued. These stocks are Carrier Global Corporation (NYSE:CARR), Hormel Foods Corporation (NYSE:HRL), The Kroger Co. (NYSE:KR), American Water Works Company, Inc. (NYSE:AWK), HP Inc. (NYSE:HPQ), Consolidated Edison, Inc. (NYSE:ED), and Parker-Hannifin Corporation (NYSE:PH). This group of stocks’ market values match F’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 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $1305 million. That figure was $1080 million in F’s case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Consolidated Edison, Inc. (NYSE:ED) is the least popular one with only 18 bullish hedge fund positions. Ford Motor Company (NYSE:F) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for F is 67.4. 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 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on F as the stock returned 34.4% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.