The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Vodafone Group Plc (NASDAQ:VOD), and what that likely means for the prospects of the company and its stock.
Hedge fund interest in Vodafone Group Plc (NASDAQ:VOD) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VOD to other stocks including Norfolk Southern Corp. (NYSE:NSC), Occidental Petroleum Corporation (NYSE:OXY), and Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) to get a better sense of its popularity.
In today’s marketplace there are many methods stock market investors use to grade stocks. Two of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a healthy margin (see the details here).
Let's take a glance at the new hedge fund action regarding Vodafone Group Plc (NASDAQ:VOD).
What does the smart money think about Vodafone Group Plc (NASDAQ:VOD)?
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. By comparison, 19 hedge funds held shares or bullish call options in VOD a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Vodafone Group Plc (NASDAQ:VOD), which was worth $379.5 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $21.2 million worth of shares. Moreover, Citadel Investment Group, D E Shaw, and Two Sigma Advisors were also bullish on Vodafone Group Plc (NASDAQ:VOD), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Vodafone Group Plc (NASDAQ:VOD) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of hedgies that slashed their full holdings in the third quarter. It's worth mentioning that Paul Tudor Jones's Tudor Investment Corp sold off the largest position of the 700 funds watched by Insider Monkey, worth an estimated $6.7 million in stock, and David Fiszel's Honeycomb Asset Management was right behind this move, as the fund sold off about $5.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Vodafone Group Plc (NASDAQ:VOD). We will take a look at Norfolk Southern Corp. (NYSE:NSC), Occidental Petroleum Corporation (NYSE:OXY), Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG), and General Dynamics Corporation (NYSE:GD). This group of stocks' market caps match VOD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NSC,47,1869998,0 OXY,35,880306,3 SMFG,10,408347,-1 GD,42,6460054,5 Average,33.5,2404676,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $2405 million. That figure was $438 million in VOD's case. Norfolk Southern Corp. (NYSE:NSC) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Vodafone Group Plc (NASDAQ:VOD) 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 VOD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VOD investors were disappointed as the stock returned -9.9% 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.