Were Hedge Funds Right About Comcast Corporation (CMCSA)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Comcast Corporation (NASDAQ:CMCSA).

Comcast Corporation (NASDAQ:CMCSA) has seen an increase in hedge fund interest of late. Comcast Corporation (NASDAQ:CMCSA) was in 88 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 105. Our calculations also showed that CMCSA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

William Gray Orbis Investment Management

William Gray of Orbis Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind we’re going to analyze the new hedge fund action regarding Comcast Corporation (NASDAQ:CMCSA).

Do Hedge Funds Think CMCSA Is A Good Stock To Buy Now?

At first quarter’s end, a total of 88 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. By comparison, 83 hedge funds held shares or bullish call options in CMCSA a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Is CMCSA A Good Stock To Buy?

The largest stake in Comcast Corporation (NASDAQ:CMCSA) was held by Eagle Capital Management, which reported holding $2063 million worth of stock at the end of December. It was followed by Trian Partners with a $1074.5 million position. Other investors bullish on the company included Orbis Investment Management, Arrowstreet Capital, and First Pacific Advisors LLC. In terms of the portfolio weights assigned to each position JNE Partners allocated the biggest weight to Comcast Corporation (NASDAQ:CMCSA), around 19.16% of its 13F portfolio. 3G Sahana Capital Management is also relatively very bullish on the stock, designating 17.56 percent of its 13F equity portfolio to CMCSA.

Now, specific money managers were breaking ground themselves. Darsana Capital Partners, managed by Anand Desai, initiated the most valuable position in Comcast Corporation (NASDAQ:CMCSA). Darsana Capital Partners had $162.3 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $52.7 million investment in the stock during the quarter. The other funds with brand new CMCSA positions are Michael Gelband’s ExodusPoint Capital, Renaissance Technologies, and Scott Bessent’s Key Square Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Comcast Corporation (NASDAQ:CMCSA) but similarly valued. We will take a look at Verizon Communications Inc. (NYSE:VZ), Exxon Mobil Corporation (NYSE:XOM), Netflix, Inc. (NASDAQ:NFLX), Adobe Inc. (NASDAQ:ADBE), The Coca-Cola Company (NYSE:KO), Cisco Systems, Inc. (NASDAQ:CSCO), and Toyota Motor Corporation (NYSE:TM). All of these stocks’ market caps match CMCSA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VZ 69 11383576 2
XOM 65 2770198 2
NFLX 110 14159343 -6
ADBE 107 12111692 -7
KO 61 24903946 -1
CSCO 59 5194074 -1
TM 18 824174 7
Average 69.9 10192429 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 69.9 hedge funds with bullish positions and the average amount invested in these stocks was $10192 million. That figure was $9762 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 18 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 72.2. 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 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 25.8% in 2021 through August 6th and beat the market again by 6.7 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 9.4% since the end of March (through 8/6) 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.