We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Dell Technologies Inc. (NYSE:DELL).
Is Dell Technologies Inc. (NYSE:DELL) a buy right now? The best stock pickers are becoming less hopeful. The number of bullish hedge fund bets shrunk by 6 in recent months. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Paul Singer of Elliott Management
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the key hedge fund action encompassing Dell Technologies Inc. (NYSE:DELL).
How have hedgies been trading Dell Technologies Inc. (NYSE:DELL)?
Heading into the first quarter of 2020, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DELL over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Elliott Management, managed by Paul Singer, holds the number one position in Dell Technologies Inc. (NYSE:DELL). Elliott Management has a $777.5 million position in the stock, comprising 6.6% of its 13F portfolio. Sitting at the No. 2 spot is Canyon Capital Advisors, led by Joshua Friedman and Mitchell Julis, holding a $312.9 million position; 7.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish contain Paul Singer’s Elliott Management, Steve Cohen’s Point72 Asset Management and Anthony Bozza’s Lakewood Capital Management. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to Dell Technologies Inc. (NYSE:DELL), around 26.55% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, setting aside 7.97 percent of its 13F equity portfolio to DELL.
Judging by the fact that Dell Technologies Inc. (NYSE:DELL) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies that slashed their entire stakes in the third quarter. At the top of the heap, Glenn Fuhrman and John Phelan’s MSD Capital dropped the biggest stake of all the hedgies watched by Insider Monkey, valued at an estimated $235.4 million in stock, and Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management was right behind this move, as the fund cut about $129.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dell Technologies Inc. (NYSE:DELL) but similarly valued. These stocks are Delta Air Lines, Inc. (NYSE:DAL), Workday Inc (NASDAQ:WDAY), Prudential Financial Inc (NYSE:PRU), and Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA). All of these stocks’ market caps match DELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DAL | 70 | 7037405 | -1 |
| WDAY | 55 | 2251111 | 11 |
| PRU | 36 | 691519 | 6 |
| BBVA | 8 | 338963 | -2 |
| Average | 42.25 | 2579750 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $2580 million. That figure was $2362 million in DELL’s case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 8 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately DELL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); DELL investors were disappointed as the stock returned -22.2% 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 most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
