Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Activision Blizzard, Inc. (NASDAQ:ATVI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Activision Blizzard, Inc. (NASDAQ:ATVI) the right pick for your portfolio? Prominent investors are becoming hopeful. The number of bullish hedge fund positions advanced by 24 lately. Our calculations also showed that ATVI isn't among the 30 most popular stocks among hedge funds (see the video below). ATVI was in 70 hedge funds' portfolios at the end of the third quarter of 2019. There were 46 hedge funds in our database with ATVI holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30602" align="aligncenter" width="600"] Philippe Laffont of Coatue Management[/caption]
We're going to take a peek at the key hedge fund action regarding Activision Blizzard, Inc. (NASDAQ:ATVI).
Hedge fund activity in Activision Blizzard, Inc. (NASDAQ:ATVI)
At the end of the third quarter, a total of 70 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 52% from the second quarter of 2019. By comparison, 74 hedge funds held shares or bullish call options in ATVI a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Lone Pine Capital held the most valuable stake in Activision Blizzard, Inc. (NASDAQ:ATVI), which was worth $595.1 million at the end of the third quarter. On the second spot was Coatue Management which amassed $320.6 million worth of shares. Alyeska Investment Group, Citadel Investment Group, and Suvretta Capital 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 SoMa Equity Partners allocated the biggest weight to Activision Blizzard, Inc. (NASDAQ:ATVI), around 10.66% of its portfolio. AlphaOne Capital Partners is also relatively very bullish on the stock, designating 7.76 percent of its 13F equity portfolio to ATVI.
Now, key money managers have jumped into Activision Blizzard, Inc. (NASDAQ:ATVI) headfirst. Suvretta Capital Management, managed by Aaron Cowen, established the most outsized position in Activision Blizzard, Inc. (NASDAQ:ATVI). Suvretta Capital Management had $161.2 million invested in the company at the end of the quarter. Ryan Frick and Oliver Evans's Dorsal Capital Management also initiated a $87.3 million position during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Alexander Mitchell's Scopus Asset Management, and David Fiszel's Honeycomb Asset Management.
Let's now review hedge fund activity in other stocks similar to Activision Blizzard, Inc. (NASDAQ:ATVI). These stocks are Sempra Energy (NYSE:SRE), Marathon Petroleum Corp (NYSE:MPC), Occidental Petroleum Corporation (NYSE:OXY), and Ross Stores, Inc. (NASDAQ:ROST). This group of stocks' market valuations resemble ATVI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SRE,28,1270412,3 MPC,63,2858868,3 OXY,57,2774136,15 ROST,39,1067484,7 Average,46.75,1992725,7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.75 hedge funds with bullish positions and the average amount invested in these stocks was $1993 million. That figure was $3015 million in ATVI's case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Sempra Energy (NYSE:SRE) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Activision Blizzard, Inc. (NASDAQ:ATVI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately ATVI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ATVI were disappointed as the stock returned 0.2% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.