At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Toyota Motor Corporation (NYSE:TM) makes for a good investment right now.
Is Toyota Motor Corporation (NYSE:TM) going to take off soon? Prominent investors were taking a pessimistic view. The number of bullish hedge fund bets decreased by 1 lately. Toyota Motor Corporation (NYSE:TM) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 14. Our calculations also showed that TM isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s review the recent hedge fund action surrounding Toyota Motor Corporation (NYSE:TM).
Do Hedge Funds Think TM Is A Good Stock To Buy Now?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TM over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Toyota Motor Corporation (NYSE:TM), worth close to $537.1 million, comprising 0.5% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $137.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism contain William B. Gray’s Orbis Investment Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to Toyota Motor Corporation (NYSE:TM), around 0.84% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, designating 0.47 percent of its 13F equity portfolio to TM.
Due to the fact that Toyota Motor Corporation (NYSE:TM) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers who sold off their entire stakes by the end of the third quarter. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, valued at close to $60.2 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Toyota Motor Corporation (NYSE:TM) but similarly valued. These stocks are Oracle Corporation (NASDAQ:ORCL), Thermo Fisher Scientific Inc. (NYSE:TMO), Cisco Systems, Inc. (NASDAQ:CSCO), McDonald’s Corporation (NYSE:MCD), Novo Nordisk A/S (NYSE:NVO), The Unilever Group (NYSE:UL), and Costco Wholesale Corporation (NASDAQ:COST). All of these stocks’ market caps resemble TM’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.6 hedge funds with bullish positions and the average amount invested in these stocks was $3004 million. That figure was $699 million in TM’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Toyota Motor Corporation (NYSE:TM) is even less popular than UL. Our overall hedge fund sentiment score for TM is 29.7. 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. Hedge funds dodged a bullet by taking a bearish stance towards TM. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately TM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TM investors were disappointed as the stock returned 4.8% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.