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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 Melvin Capital's recent GameStop 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 Motorola Solutions Inc (NYSE:MSI).
Is MSI stock a buy? The smart money was in a bullish mood. The number of bullish hedge fund bets moved up by 6 in recent months. Motorola Solutions Inc (NYSE:MSI) was in 35 hedge funds' portfolios at the end of December. The all time high for this statistic is 41. Our calculations also showed that MSI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Michael Gelband of ExodusPoint Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a peek at the fresh hedge fund action encompassing Motorola Solutions Inc (NYSE:MSI).
Do Hedge Funds Think MSI Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in MSI a year ago. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Motorola Solutions Inc (NYSE:MSI) was held by Orbis Investment Management, which reported holding $384.8 million worth of stock at the end of December. It was followed by D E Shaw with a $92.8 million position. Other investors bullish on the company included Holocene Advisors, Millennium Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Orbis Investment Management allocated the biggest weight to Motorola Solutions Inc (NYSE:MSI), around 2.79% of its 13F portfolio. Omega Advisors is also relatively very bullish on the stock, setting aside 1.23 percent of its 13F equity portfolio to MSI.
As aggregate interest increased, key money managers have jumped into Motorola Solutions Inc (NYSE:MSI) headfirst. Te Ahumairangi Investment Management, managed by Nicholas Bagnall, created the largest position in Motorola Solutions Inc (NYSE:MSI). Te Ahumairangi Investment Management had $6.9 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $6.3 million position during the quarter. The other funds with brand new MSI positions are Richard Schimel and Lawrence Sapanski's Cinctive Capital Management, Jinghua Yan's TwinBeech Capital, and Michael Gelband's ExodusPoint Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Motorola Solutions Inc (NYSE:MSI) but similarly valued. We will take a look at Stanley Black & Decker, Inc. (NYSE:SWK), Canadian Natural Resources Limited (NYSE:CNQ), Archer Daniels Midland Company (NYSE:ADM), Fastenal Company (NASDAQ:FAST), Simon Property Group, Inc (NYSE:SPG), McKesson Corporation (NYSE:MCK), and AMETEK, Inc. (NYSE:AME). This group of stocks' market values match MSI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWK,38,846102,0 CNQ,29,341108,-1 ADM,35,703261,9 FAST,30,612311,-8 SPG,32,353434,7 MCK,51,1768164,-3 AME,31,956468,-6 Average,35.1,797264,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $797 million. That figure was $777 million in MSI's case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Canadian Natural Resources Limited (NYSE:CNQ) is the least popular one with only 29 bullish hedge fund positions. Motorola Solutions Inc (NYSE:MSI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MSI is 49.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on MSI as the stock returned 11.2% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.