We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Corning Incorporated (NYSE:GLW).
Corning Incorporated (NYSE:GLW) shareholders have witnessed an increase in activity from the world's largest hedge funds recently. GLW was in 37 hedge funds' portfolios at the end of the first quarter of 2019. There were 30 hedge funds in our database with GLW holdings at the end of the previous quarter. Our calculations also showed that glw isn't among the 30 most popular stocks among hedge funds.
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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the recent hedge fund action encompassing Corning Incorporated (NYSE:GLW).
Hedge fund activity in Corning Incorporated (NYSE:GLW)
Heading into the second quarter of 2019, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the fourth quarter of 2018. On the other hand, there were a total of 25 hedge funds with a bullish position in GLW a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Two Sigma Advisors was the largest shareholder of Corning Incorporated (NYSE:GLW), with a stake worth $89.9 million reported as of the end of March. Trailing Two Sigma Advisors was Arrowstreet Capital, which amassed a stake valued at $83 million. Millennium Management, Renaissance Technologies, and Adage Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, created the most outsized position in Corning Incorporated (NYSE:GLW). Renaissance Technologies had $66.5 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $12.2 million position during the quarter. The other funds with brand new GLW positions are David Costen Haley's HBK Investments, Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, and Nick Thakore's Diametric Capital.
Let's now review hedge fund activity in other stocks similar to Corning Incorporated (NYSE:GLW). These stocks are NXP Semiconductors NV (NASDAQ:NXPI), Republic Services, Inc. (NYSE:RSG), Pioneer Natural Resources Company (NYSE:PXD), and Halliburton Company (NYSE:HAL). All of these stocks' market caps resemble GLW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXPI,52,3358284,-20 RSG,30,595673,0 PXD,55,1686677,-7 HAL,38,854658,4 Average,43.75,1623823,-5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.75 hedge funds with bullish positions and the average amount invested in these stocks was $1624 million. That figure was $623 million in GLW's case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Republic Services, Inc. (NYSE:RSG) is the least popular one with only 30 bullish hedge fund positions. Corning Incorporated (NYSE:GLW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately GLW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GLW investors were disappointed as the stock returned -11.2% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.