Coronavirus is probably the #1 concern in investors' minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. What do these smart investors think about ViacomCBS Inc. (NASDAQ:VIAC)?
ViacomCBS Inc. (NASDAQ:VIAC) investors should be aware of an increase in enthusiasm from smart money recently. VIAC was in 64 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 42 hedge funds in our database with VIAC holdings at the end of the previous quarter. Our calculations also showed that VIAC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_26423" align="aligncenter" width="600"] Seth Klarman of Baupost 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, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind we're going to take a gander at the new hedge fund action surrounding ViacomCBS Inc. (NASDAQ:VIAC).
Hedge fund activity in ViacomCBS Inc. (NASDAQ:VIAC)
At the end of the fourth quarter, a total of 64 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 52% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VIAC over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Seth Klarman's Baupost Group has the most valuable position in ViacomCBS Inc. (NASDAQ:VIAC), worth close to $713.5 million, comprising 7.9% of its total 13F portfolio. The second most bullish fund manager is Glenview Capital, managed by Larry Robbins, which holds a $632.9 million position; 5.5% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass John Paulson's Paulson & Co, John W. Rogers's Ariel Investments and Benjamin Pass's TOMS Capital. In terms of the portfolio weights assigned to each position TOMS Capital allocated the biggest weight to ViacomCBS Inc. (NASDAQ:VIAC), around 19.75% of its 13F portfolio. KG Funds Management is also relatively very bullish on the stock, designating 12.52 percent of its 13F equity portfolio to VIAC.
Consequently, specific money managers were breaking ground themselves. Baupost Group, managed by Seth Klarman, established the most valuable position in ViacomCBS Inc. (NASDAQ:VIAC). Baupost Group had $713.5 million invested in the company at the end of the quarter. Larry Robbins's Glenview Capital also initiated a $632.9 million position during the quarter. The other funds with brand new VIAC positions are Dan Loeb's Third Point, Ike Kier and Ilya Zaides's KG Funds Management, and David Fiszel's Honeycomb Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ViacomCBS Inc. (NASDAQ:VIAC) but similarly valued. We will take a look at Archer Daniels Midland Company (NYSE:ADM), Fortive Corporation (NYSE:FTV), Stanley Black & Decker, Inc. (NYSE:SWK), and Pioneer Natural Resources Company (NYSE:PXD). This group of stocks' market caps are similar to VIAC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADM,28,712255,5 FTV,43,1260211,7 SWK,41,1598834,13 PXD,53,1070714,3 Average,41.25,1160504,7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.25 hedge funds with bullish positions and the average amount invested in these stocks was $1161 million. That figure was $3293 million in VIAC's case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Archer Daniels Midland Company (NYSE:ADM) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks ViacomCBS Inc. (NASDAQ:VIAC) is more popular among hedge funds. 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. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately VIAC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VIAC were disappointed as the stock returned -42.1% during the first two months of 2020 (through March 2nd) 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.