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DISH Network Corp. (DISH) Fell Out Of Favor With Hedge Funds

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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards DISH Network Corp. (NASDAQ:DISH).

DISH Network Corp. (NASDAQ:DISH) has experienced a decrease in support from the world's most elite money managers in recent months. DISH Network Corp. (NASDAQ:DISH) was in 51 hedge funds' portfolios at the end of March. The all time high for this statistic is 60. There were 57 hedge funds in our database with DISH holdings at the end of December. Our calculations also showed that DISH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Christian Leone of Luxor Capital Group

At Insider Monkey we leave no stone unturned when looking for 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, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Keeping this in mind we're going to review the new hedge fund action encompassing DISH Network Corp. (NASDAQ:DISH).

Do Hedge Funds Think DISH Is A Good Stock To Buy Now?

At Q1's end, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2020. On the other hand, there were a total of 44 hedge funds with a bullish position in DISH a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Eagle Capital Management held the most valuable stake in DISH Network Corp. (NASDAQ:DISH), which was worth $662.4 million at the end of the fourth quarter. On the second spot was Palestra Capital Management which amassed $291.1 million worth of shares. Jericho Capital Asset Management, Paulson & Co, and Atreides Management 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 Key Square Capital Management allocated the biggest weight to DISH Network Corp. (NASDAQ:DISH), around 14% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, dishing out 12.33 percent of its 13F equity portfolio to DISH.

Seeing as DISH Network Corp. (NASDAQ:DISH) has faced bearish sentiment from the smart money, it's safe to say that there were a few hedge funds that elected to cut their full holdings last quarter. Intriguingly, Andy Redleaf's Whitebox Advisors sold off the largest stake of the "upper crust" of funds monitored by Insider Monkey, comprising about $33.2 million in stock, and Dan Loeb's Third Point was right behind this move, as the fund cut about $23 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.

Let's now review hedge fund activity in other stocks similar to DISH Network Corp. (NASDAQ:DISH). We will take a look at Xylem Inc (NYSE:XYL), StoneCo Ltd. (NASDAQ:STNE), The Cooper Companies, Inc. (NYSE:COO), FirstEnergy Corp. (NYSE:FE), MGM Resorts International (NYSE:MGM), Farfetch Limited (NYSE:FTCH), and Citizens Financial Group Inc (NYSE:CFG). This group of stocks' market caps are closest to DISH's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XYL,23,846370,2 STNE,39,2157227,-8 COO,43,1378040,12 FE,51,1840599,1 MGM,57,2715848,13 FTCH,57,3095281,10 CFG,41,579075,3 Average,44.4,1801777,4.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.4 hedge funds with bullish positions and the average amount invested in these stocks was $1802 million. That figure was $2206 million in DISH's case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 23 bullish hedge fund positions. DISH Network Corp. (NASDAQ:DISH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DISH is 65.7. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on DISH, though not to the same extent, as the stock returned 10.6% since Q1 (through June 18th) and outperformed the market as well.

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