Hedge Funds Are Warming Up To DISH Network Corporation (DISH)
As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about DISH Network Corporation (NASDAQ:DISH).
Is DISH Network Corporation (NASDAQ:DISH) a good investment right now? The best stock pickers are getting more bullish. The number of long hedge fund bets rose by 4 recently. Our calculations also showed that DISH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). DISH was in 36 hedge funds' portfolios at the end of September. There were 32 hedge funds in our database with DISH holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_30647" align="aligncenter" width="478"]
Boykin Curry of Eagle Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the fresh hedge fund action surrounding DISH Network Corporation (NASDAQ:DISH).
What have hedge funds been doing with DISH Network Corporation (NASDAQ:DISH)?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DISH over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Eagle Capital Management, managed by Boykin Curry, holds the largest position in DISH Network Corporation (NASDAQ:DISH). Eagle Capital Management has a $474.4 million position in the stock, comprising 1.7% of its 13F portfolio. The second most bullish fund manager is Brian J. Higgins of King Street Capital, with a $441.7 million position; 34% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass John Paulson's Paulson & Co, Scott Bessent's Key Square Capital Management and Mario Gabelli's GAMCO Investors. In terms of the portfolio weights assigned to each position King Street Capital allocated the biggest weight to DISH Network Corporation (NASDAQ:DISH), around 34.02% of its portfolio. Key Square Capital Management is also relatively very bullish on the stock, setting aside 26.48 percent of its 13F equity portfolio to DISH.
As industrywide interest jumped, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in DISH Network Corporation (NASDAQ:DISH). Arrowstreet Capital had $23.1 million invested in the company at the end of the quarter. Alan Fournier's Pennant Capital Management also initiated a $8 million position during the quarter. The following funds were also among the new DISH investors: Carl Tiedemann and Michael Tiedemann's TIG Advisors, Ray Dalio's Bridgewater Associates, and David Costen Haley's HBK Investments.
Let's go over hedge fund activity in other stocks similar to DISH Network Corporation (NASDAQ:DISH). We will take a look at HEICO Corporation (NYSE:HEI), ZTO Express (Cayman) Inc. (NYSE:ZTO), Check Point Software Technologies Ltd. (NASDAQ:CHKP), and Arthur J. Gallagher & Co. (NYSE:AJG). This group of stocks' market valuations are closest to DISH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HEI,42,1148598,7 ZTO,19,505301,4 CHKP,20,407935,-4 AJG,23,286963,-2 Average,26,587199,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $587 million. That figure was $1531 million in DISH's case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 19 bullish hedge fund positions. DISH Network Corporation (NASDAQ:DISH) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately DISH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on DISH were disappointed as the stock returned 0.3% during the fourth quarter (through the end of November) 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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