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 Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC).
Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) investors should be aware of an increase in enthusiasm from smart money lately. Our calculations also showed that ERIC 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.
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 trades like this one. 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 analyze the new hedge fund action encompassing Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC).
How have hedgies been trading Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC)?
At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ERIC over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) was held by Renaissance Technologies, which reported holding $236.7 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $27.3 million position. Other investors bullish on the company included Cavalry Asset Management, Citadel Investment Group, and 13D Management. In terms of the portfolio weights assigned to each position 13D Management allocated the biggest weight to Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), around 6% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, dishing out 2.98 percent of its 13F equity portfolio to ERIC.
As one would reasonably expect, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). Balyasny Asset Management had $27.3 million invested in the company at the end of the quarter. Nick Thakore’s Diametric Capital also initiated a $1.8 million position during the quarter. The other funds with brand new ERIC positions are Tor Minesuk’s Mondrian Capital, Anand Parekh’s Alyeska Investment Group, and Mike Vranos’s Ellington.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) but similarly valued. These stocks are Lloyds Banking Group PLC (NYSE:LYG), Consolidated Edison, Inc. (NYSE:ED), Eversource Energy (NYSE:ES), and Canadian Imperial Bank of Commerce (NYSE:CM). This group of stocks’ market values resemble ERIC’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 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $372 million. That figure was $367 million in ERIC’s case. Eversource Energy (NYSE:ES) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 9 bullish hedge fund positions. Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately ERIC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ERIC were disappointed as the stock returned 15.6% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.