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Should You Avoid SK Telecom Co., Ltd. (SKM)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of SK Telecom Co., Ltd. (NYSE:SKM).

SK Telecom Co., Ltd. (NYSE:SKM) was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. SKM has experienced a decrease in hedge fund interest in recent months. There were 6 hedge funds in our database with SKM positions at the end of the previous quarter. Our calculations also showed that SKM 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Xiniya Earnings Call Transcript XNY 2014 Q3

New York Stock Exchange

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Now we’re going to take a look at the recent hedge fund action regarding SK Telecom Co., Ltd. (NYSE:SKM).

What does smart money think about SK Telecom Co., Ltd. (NYSE:SKM)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in SKM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Richard Oldfield’s Oldfield Partners has the largest position in SK Telecom Co., Ltd. (NYSE:SKM), worth close to $65.4 million, amounting to 8.3% of its total 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $43.4 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain Ernest Chow and Jonathan Howe’s Sensato Capital Management, D. E. Shaw’s D E Shaw and Mike Vranos’s Ellington. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to SK Telecom Co., Ltd. (NYSE:SKM), around 8.28% of its 13F portfolio. Sensato Capital Management is also relatively very bullish on the stock, designating 4.31 percent of its 13F equity portfolio to SKM.

Because SK Telecom Co., Ltd. (NYSE:SKM) has experienced falling interest from hedge fund managers, it’s easy to see that there is a sect of funds that decided to sell off their positions entirely heading into Q4. Interestingly, Israel Englander’s Millennium Management dropped the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $0.9 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $0.3 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to SK Telecom Co., Ltd. (NYSE:SKM). These stocks are Quest Diagnostics Incorporated (NYSE:DGX), Datadog, Inc. (NASDAQ:DDOG), XP Inc. (NASDAQ:XP), and FMC Corporation (NYSE:FMC). This group of stocks’ market valuations are closest to SKM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DGX 38 383257 7
DDOG 44 860690 12
XP 13 165830 -15
FMC 39 560040 4
Average 33.5 492454 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $492 million. That figure was $117 million in SKM’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand XP Inc. (NASDAQ:XP) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks SK Telecom Co., Ltd. (NYSE:SKM) is even less popular than XP. 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 but managed to beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SKM, though not to the same extent, as the stock returned 18.3% during the second quarter (through the end of May) and outperformed the market as well.

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