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In this article we are going to use hedge fund sentiment as a tool and determine whether Stellantis N.V. (NYSE:STLA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Stellantis N.V. (NYSE:STLA) the right investment to pursue these days? Prominent investors were getting more bullish. The number of bullish hedge fund positions went up by 7 lately. Stellantis N.V. (NYSE:STLA) was in 28 hedge funds' portfolios at the end of June. The all time high for this statistic is 36. Our calculations also showed that STLA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with STLA positions at the end of the first 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. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
David Siegel of Two Sigma Advisors
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. Now we're going to check out the key hedge fund action surrounding Stellantis N.V. (NYSE:STLA).
Do Hedge Funds Think STLA Is A Good Stock To Buy Now?
At Q2's end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in STLA over the last 24 quarters. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in Stellantis N.V. (NYSE:STLA). Arrowstreet Capital has a $515.9 million position in the stock, comprising 0.6% of its 13F portfolio. On Arrowstreet Capital's heels is Chris Rokos of Rokos Capital Management, with a $58.4 million call position; 1.2% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include John Overdeck and David Siegel's Two Sigma Advisors, Quincy Lee's Ancient Art (Teton Capital) and Paul Marshall and Ian Wace's Marshall Wace LLP. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to Stellantis N.V. (NYSE:STLA), around 5.75% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, earmarking 4.23 percent of its 13F equity portfolio to STLA.
As one would reasonably expect, key hedge funds were breaking ground themselves. Odey Asset Management Group, managed by Crispin Odey, assembled the biggest position in Stellantis N.V. (NYSE:STLA). Odey Asset Management Group had $25.6 million invested in the company at the end of the quarter. Guy Shahar's DSAM Partners also initiated a $25.2 million position during the quarter. The following funds were also among the new STLA investors: Brian Ashford-Russell and Tim Woolley's Polar Capital, Jeffrey Altman's Owl Creek Asset Management, and Jonathan Kolatch's Redwood Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Stellantis N.V. (NYSE:STLA) but similarly valued. We will take a look at Banco Santander (Brasil) SA (NYSE:BSBR), Roku, Inc. (NASDAQ:ROKU), Boston Scientific Corporation (NYSE:BSX), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Dominion Energy Inc. (NYSE:D), Ford Motor Company (NYSE:F), and ICICI Bank Limited (NYSE:IBN). All of these stocks' market caps resemble STLA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BSBR,7,9630,2 ROKU,61,5631958,-2 BSX,51,3029136,7 REGN,48,1595301,9 D,34,1262051,-5 F,55,2106196,6 IBN,28,2473600,-3 Average,40.6,2301125,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $2301 million. That figure was $844 million in STLA's case. Roku, Inc. (NASDAQ:ROKU) 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 7 bullish hedge fund positions. Stellantis N.V. (NYSE:STLA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STLA is 52.8. 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 negative signal and 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately STLA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); STLA investors were disappointed as the stock returned 1.4% since the end of June (through 10/15) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.