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 Comcast Corporation (NASDAQ:CMCSA)? The smart money sentiment can provide an answer to this question.
Comcast Corporation (NASDAQ:CMCSA) was in 84 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 105. CMCSA has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 88 hedge funds in our database with CMCSA holdings at the end of March. Our calculations also showed that CMCSA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nelson Peltz of Trian Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s review the fresh hedge fund action encompassing Comcast Corporation (NASDAQ:CMCSA).
Do Hedge Funds Think CMCSA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 84 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 80 hedge funds held shares or bullish call options in CMCSA 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.
More specifically, Eagle Capital Management was the largest shareholder of Comcast Corporation (NASDAQ:CMCSA), with a stake worth $1698 million reported as of the end of June. Trailing Eagle Capital Management was Trian Partners, which amassed a stake valued at $1185.9 million. Orbis Investment Management, Arrowstreet Capital, and Egerton Capital Limited 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 JNE Partners allocated the biggest weight to Comcast Corporation (NASDAQ:CMCSA), around 23.51% of its 13F portfolio. 3G Sahana Capital Management is also relatively very bullish on the stock, dishing out 17.52 percent of its 13F equity portfolio to CMCSA.
Seeing as Comcast Corporation (NASDAQ:CMCSA) has witnessed declining sentiment from the smart money, it’s safe to say that there is a sect of fund managers who sold off their positions entirely last quarter. At the top of the heap, Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners dumped the largest stake of the 750 funds tracked by Insider Monkey, worth about $429.7 million in stock. Patrick Degorce’s fund, Theleme Partners, also cut its stock, about $165.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Comcast Corporation (NASDAQ:CMCSA). These stocks are Toyota Motor Corporation (NYSE:TM), NIKE, Inc. (NYSE:NKE), Netflix, Inc. (NASDAQ:NFLX), The Coca-Cola Company (NYSE:KO), Verizon Communications Inc. (NYSE:VZ), Intel Corporation (NASDAQ:INTC), and salesforce.com, inc. (NYSE:CRM). This group of stocks’ market values resemble CMCSA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TM | 12 | 903060 | -6 |
| NKE | 67 | 6425093 | -11 |
| NFLX | 113 | 13216589 | 3 |
| KO | 62 | 24965786 | 1 |
| VZ | 63 | 10958091 | -6 |
| INTC | 78 | 6764047 | -5 |
| CRM | 108 | 11767293 | 17 |
| Average | 71.9 | 10714280 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 71.9 hedge funds with bullish positions and the average amount invested in these stocks was $10714 million. That figure was $9301 million in CMCSA’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 12 bullish hedge fund positions. Comcast Corporation (NASDAQ:CMCSA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMCSA is 60.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and beat the market again by 2.3 percentage points. Unfortunately CMCSA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CMCSA were disappointed as the stock returned -9% since the end of June (through 10/29) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
