Is Fiserv (FISV) Stock A Buy or Sell?
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. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. What do these smart investors think about Fiserv, Inc. (NASDAQ:FISV)?
Is Fiserv (FISV) stock a buy or sell? Hedge funds were betting on the stock. The number of long hedge fund bets increased by 4 recently. Fiserv, Inc. (NASDAQ:FISV) was in 94 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 90. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FISV ranked 28th among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Keith Meister of Corvex Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Keeping this in mind we're going to review the new hedge fund action regarding Fiserv, Inc. (NASDAQ:FISV).
Do Hedge Funds Think FISV Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 94 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the third quarter of 2020. By comparison, 78 hedge funds held shares or bullish call options in FISV a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Melvin Capital Management held the most valuable stake in Fiserv, Inc. (NASDAQ:FISV), which was worth $990.4 million at the end of the fourth quarter. On the second spot was BlueSpruce Investments which amassed $613.1 million worth of shares. Kensico Capital, Maplelane Capital, and Point State Capital 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 Columbus Point allocated the biggest weight to Fiserv, Inc. (NASDAQ:FISV), around 12.2% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, earmarking 12.08 percent of its 13F equity portfolio to FISV.
As aggregate interest increased, key money managers have been driving this bullishness. Corvex Capital, managed by Keith Meister, created the most valuable position in Fiserv, Inc. (NASDAQ:FISV). Corvex Capital had $59.2 million invested in the company at the end of the quarter. Jeffrey Ubben's ValueAct Capital also initiated a $37.4 million position during the quarter. The other funds with new positions in the stock are Simon Sadler's Segantii Capital, Michael Kharitonov and Jon David McAuliffe's Voleon Capital, and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors.
Let's now take a look at hedge fund activity in other stocks similar to Fiserv, Inc. (NASDAQ:FISV). We will take a look at NIO Inc. (NYSE:NIO), Automatic Data Processing (NASDAQ:ADP), Cigna Corporation (NYSE:CI), Snap Inc. (NYSE:SNAP), Baidu, Inc. (NASDAQ:BIDU), Prologis Inc (NYSE:PLD), and Colgate-Palmolive Company (NYSE:CL). This group of stocks' market caps are closest to FISV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NIO,34,2634013,-1 ADP,48,3064769,6 CI,57,2578300,-5 SNAP,63,4610841,12 BIDU,51,4634061,8 PLD,36,655443,3 CL,46,1515874,-1 Average,47.9,2813329,3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.9 hedge funds with bullish positions and the average amount invested in these stocks was $2813 million. That figure was $5178 million in FISV's case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Fiserv, Inc. (NASDAQ:FISV) is more popular among hedge funds. Our overall hedge fund sentiment score for FISV is 89. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on FISV as the stock returned 7% since the end of December (through 3/19) 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.
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