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. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Fiserv, Inc. (NASDAQ:FISV).
Is Fiserv, Inc. (NASDAQ:FISV) a cheap investment now? Hedge funds are in a bearish mood. The number of bullish hedge fund positions dropped by 2 recently. Our calculations also showed that FISV 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). FISV was in 78 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 80 hedge funds in our database with FISV holdings at the end of the previous quarter.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Leon Cooperman of Omega Advisors
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). 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 take a look at the latest hedge fund action surrounding Fiserv, Inc. (NASDAQ:FISV).
What have hedge funds been doing with Fiserv, Inc. (NASDAQ:FISV)?
Heading into the first quarter of 2020, a total of 78 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FISV over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Fiserv, Inc. (NASDAQ:FISV) was held by Egerton Capital Limited, which reported holding $892 million worth of stock at the end of September. It was followed by Eagle Capital Management with a $409.4 million position. Other investors bullish on the company included Kensico Capital, Point State Capital, and Omega Advisors. In terms of the portfolio weights assigned to each position Toscafund Asset Management allocated the biggest weight to Fiserv, Inc. (NASDAQ:FISV), around 28.98% of its 13F portfolio. Caldera Capital is also relatively very bullish on the stock, earmarking 17.29 percent of its 13F equity portfolio to FISV.
Due to the fact that Fiserv, Inc. (NASDAQ:FISV) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that elected to cut their full holdings in the third quarter. Intriguingly, James Parsons’s Junto Capital Management said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $67.8 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund cut about $63 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Fiserv, Inc. (NASDAQ:FISV) but similarly valued. These stocks are Stryker Corporation (NYSE:SYK), BlackRock, Inc. (NYSE:BLK), Anthem Inc (NYSE:ANTM), and Cigna Corporation (NYSE:CI). This group of stocks’ market values resemble FISV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYK | 43 | 833267 | 7 |
| BLK | 43 | 916922 | -4 |
| ANTM | 71 | 4833772 | 7 |
| CI | 72 | 4118635 | 7 |
| Average | 57.25 | 2675649 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.25 hedge funds with bullish positions and the average amount invested in these stocks was $2676 million. That figure was $4174 million in FISV’s case. Cigna Corporation (NYSE:CI) is the most popular stock in this table. On the other hand Stryker Corporation (NYSE:SYK) is the least popular one with only 43 bullish hedge fund positions. Compared to these stocks Fiserv, Inc. (NASDAQ:FISV) is more popular among hedge funds. 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 lost 1.0% in 2020 through April 20th and still beat the market by 11 percentage points. Unfortunately FISV wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FISV were disappointed as the stock returned -15.9% during the three months of 2020 (through April 20th) 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.
