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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding DISH Network Corp. (NASDAQ:DISH).
DISH Network Corp. (NASDAQ:DISH) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 51 hedge funds' portfolios at the end of June. Our calculations also showed that DISH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Qorvo Inc (NASDAQ:QRVO), Cheniere Energy, Inc. (NYSE:LNG), and Martin Marietta Materials, Inc. (NYSE:MLM) to gather more data points.
In the 21st century investor’s toolkit there are tons of signals shareholders use to value stocks. Two of the less known signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the broader indices by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Boykin Curry of Eagle Capital
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Do Hedge Funds Think DISH Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DISH over the last 24 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Eagle Capital Management was the largest shareholder of DISH Network Corp. (NASDAQ:DISH), with a stake worth $793.5 million reported as of the end of June. Trailing Eagle Capital Management was Palestra Capital Management, which amassed a stake valued at $389.3 million. Jericho Capital Asset Management, Atreides Management, and Paulson & Co 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 Pennant Capital Management allocated the biggest weight to DISH Network Corp. (NASDAQ:DISH), around 16.64% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, designating 15.02 percent of its 13F equity portfolio to DISH.
Seeing as DISH Network Corp. (NASDAQ:DISH) has witnessed falling interest from the smart money, it's safe to say that there were a few hedgies that elected to cut their positions entirely last quarter. At the top of the heap, Robert Henry Lynch's Aristeia Capital dropped the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $96.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $53.6 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as DISH Network Corp. (NASDAQ:DISH) but similarly valued. These stocks are Qorvo Inc (NASDAQ:QRVO), Cheniere Energy, Inc. (NYSE:LNG), Martin Marietta Materials, Inc. (NYSE:MLM), Edison International (NYSE:EIX), Extra Space Storage, Inc. (NYSE:EXR), Kellogg Company (NYSE:K), and Paycom Software Inc (NYSE:PAYC). This group of stocks' market caps are similar to DISH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QRVO,40,2300268,-1 LNG,49,2944377,9 MLM,34,2014762,-7 EIX,18,1386816,-17 EXR,21,176013,-7 K,32,482871,0 PAYC,39,1149714,-7 Average,33.3,1493546,-4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $1494 million. That figure was $2543 million in DISH's case. Cheniere Energy, Inc. (NYSE:LNG) is the most popular stock in this table. On the other hand Edison International (NYSE:EIX) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks DISH Network Corp. (NASDAQ:DISH) is more popular among hedge funds. Our overall hedge fund sentiment score for DISH is 80.5. 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 returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on DISH as the stock returned 8% since the end of June (through 10/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.