The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. 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 we look at how hedge funds traded Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) and determine whether the smart money was really smart about this stock.
Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) investors should be aware of an increase in hedge fund sentiment in recent months. ERIC was in 20 hedge funds' portfolios at the end of the first quarter of 2020. There were 18 hedge funds in our database with ERIC positions at the end of the previous quarter. Our calculations also showed that ERIC 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons Founder of Renaissance Technologies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we're going to take a glance at the fresh hedge fund action surrounding Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC).
Hedge fund activity in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC)
At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ERIC over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) was held by Renaissance Technologies, which reported holding $236.7 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $27.3 million position. Other investors bullish on the company included Cavalry Asset Management, Citadel Investment Group, and 13D Management. In terms of the portfolio weights assigned to each position 13D Management allocated the biggest weight to Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), around 6% of its 13F portfolio. Cavalry Asset Management is also relatively very bullish on the stock, dishing out 2.98 percent of its 13F equity portfolio to ERIC.
As aggregate interest increased, key hedge funds have jumped into Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). Balyasny Asset Management had $27.3 million invested in the company at the end of the quarter. Nick Thakore's Diametric Capital also initiated a $1.8 million position during the quarter. The following funds were also among the new ERIC investors: Tor Minesuk's Mondrian Capital, Anand Parekh's Alyeska Investment Group, and Mike Vranos's Ellington.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) but similarly valued. These stocks are Lloyds Banking Group PLC (NYSE:LYG), Consolidated Edison, Inc. (NYSE:ED), Eversource Energy (NYSE:ES), and Canadian Imperial Bank of Commerce (NYSE:CM). All of these stocks' market caps resemble ERIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LYG,9,37400,4 ED,25,844776,-1 ES,26,460667,2 CM,10,144510,-4 Average,17.5,371838,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $372 million. That figure was $367 million in ERIC's case. Eversource Energy (NYSE:ES) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 9 bullish hedge fund positions. Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) is not the most popular stock in this group but hedge fund interest is still above average. 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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on ERIC as the stock returned 45.9% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.