The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards International Business Machines Corp. (NYSE:IBM).
International Business Machines Corp. (NYSE:IBM) shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. IBM was in 46 hedge funds' portfolios at the end of March. There were 48 hedge funds in our database with IBM positions at the end of the previous quarter. Our calculations also showed that ibm 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.
Let's take a peek at the key hedge fund action regarding International Business Machines Corp. (NYSE:IBM).
How are hedge funds trading International Business Machines Corp. (NYSE:IBM)?
Heading into the second quarter of 2019, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IBM over the last 15 quarters. So, let's find 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, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in International Business Machines Corp. (NYSE:IBM). Arrowstreet Capital has a $690.6 million position in the stock, comprising 1.6% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $505.3 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism contain Jim Simons's Renaissance Technologies, and D. E. Shaw's D E Shaw.
Because International Business Machines Corp. (NYSE:IBM) has witnessed falling interest from the smart money, we can see that there lies a certain "tier" of hedge funds that slashed their entire stakes by the end of the third quarter. It's worth mentioning that Nick Niell's Arrowgrass Capital Partners dumped the biggest stake of all the hedgies monitored by Insider Monkey, comprising about $24.4 million in stock, and Deepak Gulati's Argentiere Capital was right behind this move, as the fund dumped about $5.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to International Business Machines Corp. (NYSE:IBM). We will take a look at Novo Nordisk A/S (NYSE:NVO), Medtronic plc (NYSE:MDT), salesforce.com, inc. (NYSE:CRM), and BHP Group (NYSE:BBL). This group of stocks' market values are closest to IBM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVO,25,2388157,7 MDT,50,2124479,-5 CRM,93,5226445,-6 BBL,21,948033,6 Average,47.25,2671779,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.25 hedge funds with bullish positions and the average amount invested in these stocks was $2672 million. That figure was $2215 million in IBM's case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand BHP Group (NYSE:BBL) is the least popular one with only 21 bullish hedge fund positions. International Business Machines Corp. (NYSE:IBM) 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 IBM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IBM investors were disappointed as the stock returned -7.1% 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.