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How do we determine whether General Motors Company (NYSE:GM) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
General Motors Company (NYSE:GM) was in 49 hedge funds' portfolios at the end of June. GM investors should pay attention to a decrease in support from the world's most elite money managers in recent months. There were 53 hedge funds in our database with GM holdings at the end of the previous quarter. Our calculations also showed that GM 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.
If you'd ask most stock holders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the moguls of this group, approximately 750 funds. It is estimated that this group of investors watch over most of all hedge funds' total asset base, and by tracking their finest equity investments, Insider Monkey has determined a number of investment strategies that have historically outperformed the market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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 analyze the latest hedge fund action encompassing General Motors Company (NYSE:GM).
How have hedgies been trading General Motors Company (NYSE:GM)?
At Q2's end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GM over the last 16 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.
The largest stake in General Motors Company (NYSE:GM) was held by Berkshire Hathaway, which reported holding $2784.6 million worth of stock at the end of March. It was followed by Eagle Capital Management with a $781.7 million position. Other investors bullish on the company included Greenhaven Associates, Greenlight Capital, and Diamond Hill Capital.
Due to the fact that General Motors Company (NYSE:GM) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there were a few money managers that decided to sell off their full holdings last quarter. Interestingly, Mike Masters's Masters Capital Management cut the biggest position of the 750 funds monitored by Insider Monkey, totaling an estimated $37.1 million in stock. Matthew Tewksbury's fund, Stevens Capital Management, also sold off its stock, about $8.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as General Motors Company (NYSE:GM) but similarly valued. We will take a look at Allergan plc (NYSE:AGN), Crown Castle International Corp. (REIT) (NYSE:CCI), Takeda Pharmaceutical Company Limited (NYSE:TAK), and Northrop Grumman Corporation (NYSE:NOC). This group of stocks' market valuations are closest to GM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGN,80,6167857,27 CCI,33,1910373,-2 TAK,27,1289782,-8 NOC,37,600316,2 Average,44.25,2492082,4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.25 hedge funds with bullish positions and the average amount invested in these stocks was $2492 million. That figure was $5744 million in GM's case. Allergan plc (NYSE:AGN) is the most popular stock in this table. On the other hand Takeda Pharmaceutical Company Limited (NYSE:TAK) is the least popular one with only 27 bullish hedge fund positions. General Motors Company (NYSE:GM) is not the most popular stock in this group but hedge fund interest is still above average. 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 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. Unfortunately GM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GM were disappointed as the stock returned -1.7% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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