As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the second quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Motorola Solutions Inc (NYSE:MSI).
Motorola Solutions Inc (NYSE:MSI) investors should pay attention to a decrease in hedge fund interest of late. Our calculations also showed that MSI isn't among the 30 most popular stocks among hedge funds (see the video below). 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the new hedge fund action encompassing Motorola Solutions Inc (NYSE:MSI).
Hedge fund activity in Motorola Solutions Inc (NYSE:MSI)
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MSI over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Coatue Management held the most valuable stake in Motorola Solutions Inc (NYSE:MSI), which was worth $285.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $218.1 million worth of shares. Moreover, D E Shaw, Adage Capital Management, and Holocene Advisors were also bullish on Motorola Solutions Inc (NYSE:MSI), allocating a large percentage of their portfolios to this stock.
Seeing as Motorola Solutions Inc (NYSE:MSI) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few hedgies that slashed their full holdings by the end of the second quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising close to $107.2 million in stock. Renaissance Technologies, also dropped its stock, about $94.7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. We will take a look at TD Ameritrade Holding Corp. (NASDAQ:AMTD), Fiat Chrysler Automobiles NV (NYSE:FCAU), Fortive Corporation (NYSE:FTV), and AutoZone, Inc. (NYSE:AZO). All of these stocks' market caps resemble MSI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMTD,22,485654,-8 FCAU,28,1924226,1 FTV,28,362155,2 AZO,37,1123000,-5 Average,28.75,973759,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $974 million. That figure was $868 million in MSI's case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table. On the other hand TD Ameritrade Holding Corp. (NASDAQ:AMTD) is the least popular one with only 22 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on MSI, though not to the same extent, as the stock returned 2.6% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.