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Hedge Fund Favorites vs. Sony Corporation (SNE) In 2019

Reymerlyn Martin

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter 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 Sony Corporation (NYSE:SNE) and see how the stock performed in comparison to hedge funds' consensus picks.

Is Sony Corporation (NYSE:SNE) going to take off soon? Prominent investors are selling. The number of bullish hedge fund positions went down by 9 recently. Our calculations also showed that SNE 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).

In today’s marketplace there are many metrics shareholders have at their disposal to size up publicly traded companies. Some of the best metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outpace the S&P 500 by a superb margin (see the details here).

[caption id="attachment_221400" align="aligncenter" width="600"] Crispin Odey of Odey Asset Management Group[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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 is still extremely cheap despite already gaining 20 percent. Keeping this in mind let's go over the fresh hedge fund action regarding Sony Corporation (NYSE:SNE).

Hedge fund activity in Sony Corporation (NYSE:SNE)

Heading into the fourth quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -26% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SNE over the last 17 quarters. 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, GAMCO Investors held the most valuable stake in Sony Corporation (NYSE:SNE), which was worth $191.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $170.7 million worth of shares. Suvretta Capital Management, Third Point, and Odey Asset Management Group 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 Oasis Management allocated the biggest weight to Sony Corporation (NYSE:SNE), around 12.55% of its 13F portfolio. Circle Road Advisors is also relatively very bullish on the stock, dishing out 6.45 percent of its 13F equity portfolio to SNE.

Because Sony Corporation (NYSE:SNE) has experienced bearish sentiment from hedge fund managers, it's safe to say that there exists a select few hedgies that decided to sell off their entire stakes last quarter. At the top of the heap, Benjamin Pass's TOMS Capital dumped the biggest position of the 750 funds tracked by Insider Monkey, valued at about $26.2 million in stock. Benjamin Pass's fund, TOMS Capital, also sold off its stock, about $26.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 9 funds last quarter.

Let's check out hedge fund activity in other stocks similar to Sony Corporation (NYSE:SNE). We will take a look at Ambev SA (NYSE:ABEV), The Estee Lauder Companies Inc (NYSE:EL), China Petroleum & Chemical Corp (NYSE:SNP), and Caterpillar Inc. (NYSE:CAT). All of these stocks' market caps are similar to SNE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABEV,18,384746,2 EL,43,1850698,7 SNP,13,178003,2 CAT,37,2758115,-8 Average,27.75,1292891,0.75 [/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 $1293 million. That figure was $783 million in SNE's case. The Estee Lauder Companies Inc (NYSE:EL) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Sony Corporation (NYSE:SNE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on SNE as the stock returned 41.9% in 2019 and outclassed the market by an even larger margin. 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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