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Is Ford Motor Company (NYSE:F) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Ford Motor Company (NYSE:F) the right pick for your portfolio? Investors who are in the know were in an optimistic mood. The number of long hedge fund bets inched up by 6 recently. Ford Motor Company (NYSE:F) was in 55 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that F isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 49 hedge funds in our database with F positions at the end of the first quarter.
In today’s marketplace there are a large number of formulas market participants have at their disposal to analyze stocks. A couple of the less known formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform the market by a healthy 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 .
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla 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. With all of this in mind we're going to review the recent hedge fund action regarding Ford Motor Company (NYSE:F).
Do Hedge Funds Think F Is A Good Stock To Buy Now?
At Q2's end, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in F over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ford Motor Company (NYSE:F) was held by D E Shaw, which reported holding $674.2 million worth of stock at the end of June. It was followed by Pzena Investment Management with a $410.3 million position. Other investors bullish on the company included Alkeon Capital Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to Ford Motor Company (NYSE:F), around 4.89% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, dishing out 4.89 percent of its 13F equity portfolio to F.
As one would reasonably expect, key money managers were leading the bulls' herd. Electron Capital Partners, managed by Jos Shaver, created the most outsized position in Ford Motor Company (NYSE:F). Electron Capital Partners had $50.1 million invested in the company at the end of the quarter. Leonard Green's Leonard Green & Partners also initiated a $22.3 million position during the quarter. The following funds were also among the new F investors: Clint Murray's Lodge Hill Capital, Joe DiMenna's ZWEIG DIMENNA PARTNERS, and Michael Cowley's Sandbar Asset Management.
Let's go over hedge fund activity in other stocks similar to Ford Motor Company (NYSE:F). These stocks are ICICI Bank Limited (NYSE:IBN), Waste Management, Inc. (NYSE:WM), Eaton Corporation plc (NYSE:ETN), Workday Inc (NASDAQ:WDAY), Itau Unibanco Holding SA (NYSE:ITUB), Ecolab Inc. (NYSE:ECL), and Northrop Grumman Corporation (NYSE:NOC). All of these stocks' market caps match F's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IBN,28,2473600,-3 WM,39,3600334,7 ETN,40,1062179,-9 WDAY,72,5187481,3 ITUB,16,431689,4 ECL,48,2773469,6 NOC,42,1053366,2 Average,40.7,2368874,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.7 hedge funds with bullish positions and the average amount invested in these stocks was $2369 million. That figure was $2106 million in F's case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 16 bullish hedge fund positions. Ford Motor Company (NYSE:F) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for F is 74.8. 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. 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 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 gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately F wasn't nearly as popular as these 5 stocks and hedge funds that were betting on F were disappointed as the stock returned -4.7% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.