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Were Hedge Funds Right About Dumping America Movil SAB de CV (AMX)?

The latest 13F reporting period has come and gone, and 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. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAmerica Movil SAB de CV (NYSE:AMX) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

America Movil SAB de CV (NYSE:AMX) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. AMX was in 11 hedge funds’ portfolios at the end of March. There were 17 hedge funds in our database with AMX positions at the end of the previous quarter. Our calculations also showed that AMX 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.

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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard Driehaus of Driehaus Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the fresh hedge fund action encompassing America Movil SAB de CV (NYSE:AMX).

What does smart money think about America Movil SAB de CV (NYSE:AMX)?

Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AMX over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AMX A Good Stock To Buy?

Among these funds, Fisher Asset Management held the most valuable stake in America Movil SAB de CV (NYSE:AMX), which was worth $62.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $43.6 million worth of shares. Millennium Management, Hosking Partners, and Arrowstreet Capital 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 Qtron Investments allocated the biggest weight to America Movil SAB de CV (NYSE:AMX), around 0.6% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, earmarking 0.42 percent of its 13F equity portfolio to AMX.

Due to the fact that America Movil SAB de CV (NYSE:AMX) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few funds who were dropping their entire stakes in the first quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital sold off the biggest stake of all the hedgies watched by Insider Monkey, worth about $38 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $12.6 million worth. These moves are important to note, as total hedge fund interest dropped by 6 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as America Movil SAB de CV (NYSE:AMX) but similarly valued. These stocks are Banco Santander (Brasil) SA (NYSE:BSBR), General Dynamics Corporation (NYSE:GD), Aon plc (NYSE:AON), and Dollar General Corp. (NYSE:DG). All of these stocks’ market caps match AMX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BSBR 8 16250 0
GD 39 5111482 -7
AON 47 2705439 -4
DG 60 2102704 10
Average 38.5 2483969 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $2484 million. That figure was $129 million in AMX’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. America Movil SAB de CV (NYSE:AMX) 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately AMX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AMX investors were disappointed as the stock returned 9.1% during the second quarter 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.

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