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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded CenturyLink, Inc. (NYSE:CTL) and determine whether the smart money was really smart about this stock.
CenturyLink, Inc. (NYSE:CTL) was in 30 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 40. CTL investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 34 hedge funds in our database with CTL holdings at the end of March. Our calculations also showed that CTL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are tons of indicators market participants have at their disposal to grade their stock investments. A pair of the best indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat the S&P 500 by a superb margin (see the details here).
Prem Watsa of Fairfax Financial Holdings
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let's take a glance at the recent hedge fund action encompassing CenturyLink, Inc. (NYSE:CTL).
What have hedge funds been doing with CenturyLink, Inc. (NYSE:CTL)?
At second quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in CTL a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Mason Hawkins's Southeastern Asset Management has the number one position in CenturyLink, Inc. (NYSE:CTL), worth close to $620.7 million, amounting to 15.5% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $40.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions comprise Prem Watsa's Fairfax Financial Holdings, Cliff Asness's AQR Capital Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Southeastern Asset Management allocated the biggest weight to CenturyLink, Inc. (NYSE:CTL), around 15.48% of its 13F portfolio. Fairfax Financial Holdings is also relatively very bullish on the stock, setting aside 1.49 percent of its 13F equity portfolio to CTL.
Because CenturyLink, Inc. (NYSE:CTL) has experienced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds who were dropping their full holdings last quarter. At the top of the heap, Renaissance Technologies cut the largest investment of the 750 funds followed by Insider Monkey, totaling about $6.3 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dropped its stock, about $1.6 million worth. These transactions are important to note, as total hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as CenturyLink, Inc. (NYSE:CTL) but similarly valued. We will take a look at E*TRADE Financial Corporation (NASDAQ:ETFC), Wabtec Corporation (NYSE:WAB), Logitech International SA (NASDAQ:LOGI), Nordson Corporation (NASDAQ:NDSN), DraftKings Inc. (NASDAQ:DKNG), PerkinElmer, Inc. (NYSE:PKI), and Cloudflare, Inc. (NYSE:NET). This group of stocks' market caps resemble CTL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ETFC,36,1370357,-1 WAB,39,1528246,-2 LOGI,13,277342,-2 NDSN,21,67604,-1 DKNG,53,693614,18 PKI,30,1263237,9 NET,36,456001,12 Average,32.6,808057,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $808 million. That figure was $788 million in CTL's case. DraftKings Inc. (NASDAQ:DKNG) is the most popular stock in this table. On the other hand Logitech International SA (NASDAQ:LOGI) is the least popular one with only 13 bullish hedge fund positions. CenturyLink, Inc. (NYSE:CTL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTL is 44.8. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. A small number of hedge funds were also right about betting on CTL as the stock returned 10.8% since the end of June (through September 14th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.