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Hedge Fund Darlings vs. Sirius XM Holdings Inc (SIRI) In 2019

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained more than 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by almost 14 percentage points. That's a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Sirius XM Holdings Inc (NASDAQ:SIRI) shareholders have witnessed an increase in activity from the world's largest hedge funds in recent months. Our calculations also showed that SIRI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

To the average investor there are several formulas stock traders can use to analyze publicly traded companies. Two of the less known formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outpace the market by a superb margin (see the details here).

[caption id="attachment_315178" align="alignnone" width="600"] Warren Buffett of Berkshire Hathaway[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's go over the latest hedge fund action regarding Sirius XM Holdings Inc (NASDAQ:SIRI).

Hedge fund activity in Sirius XM Holdings Inc (NASDAQ:SIRI)

Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in SIRI a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is SIRI A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Warren Buffett's Berkshire Hathaway has the most valuable position in Sirius XM Holdings Inc (NASDAQ:SIRI), worth close to $852.4 million, accounting for 0.4% of its total 13F portfolio. On Berkshire Hathaway's heels is Renaissance Technologies, with a $77.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Ken Griffin's Citadel Investment Group, Stuart J. Zimmer's Zimmer Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Crosslink Capital allocated the biggest weight to Sirius XM Holdings Inc (NASDAQ:SIRI), around 6.48% of its 13F portfolio. Black-and-White Capital is also relatively very bullish on the stock, earmarking 4.08 percent of its 13F equity portfolio to SIRI.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. KCL Capital, managed by Kevin Cottrell and Chris LaSusa, established the largest position in Sirius XM Holdings Inc (NASDAQ:SIRI). KCL Capital had $6.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $3.5 million investment in the stock during the quarter. The other funds with brand new SIRI positions are Perella Weinberg Partners, Michael Gelband's ExodusPoint Capital, and Zach Schreiber's Point State Capital.

Let's check out hedge fund activity in other stocks similar to Sirius XM Holdings Inc (NASDAQ:SIRI). These stocks are TransDigm Group Incorporated (NYSE:TDG), Republic Services, Inc. (NYSE:RSG), Chunghwa Telecom Co., Ltd (NYSE:CHT), and Eversource Energy (NYSE:ES). This group of stocks' market valuations are closest to SIRI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TDG,56,5183262,8 RSG,31,625488,7 CHT,5,117483,2 ES,19,739026,-2 Average,27.75,1666315,3.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1666 million. That figure was $1274 million in SIRI's case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) is the least popular one with only 5 bullish hedge fund positions. Sirius XM Holdings Inc (NASDAQ:SIRI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately SIRI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SIRI were disappointed as the stock returned 25.2% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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