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Seagate Technology Holdings plc (STX): Hedge Funds Are Coming Back

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Seagate Technology Holdings plc (NASDAQ:STX).

Seagate Technology Holdings plc (NASDAQ:STX) has experienced an increase in support from the world's most elite money managers in recent months. Seagate Technology Holdings plc (NASDAQ:STX) was in 31 hedge funds' portfolios at the end of June. The all time high for this statistic is 38. There were 27 hedge funds in our database with STX holdings at the end of March. Our calculations also showed that STX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's go over the fresh hedge fund action encompassing Seagate Technology Holdings plc (NASDAQ:STX).

Do Hedge Funds Think STX Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STX over the last 24 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

More specifically, ValueAct Capital was the largest shareholder of Seagate Technology Holdings plc (NASDAQ:STX), with a stake worth $1528 million reported as of the end of June. Trailing ValueAct Capital was Balyasny Asset Management, which amassed a stake valued at $422.6 million. Polar Capital, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position ValueAct Capital allocated the biggest weight to Seagate Technology Holdings plc (NASDAQ:STX), around 18.27% of its 13F portfolio. Panview Capital is also relatively very bullish on the stock, dishing out 2.93 percent of its 13F equity portfolio to STX.

With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized call position in Seagate Technology Holdings plc (NASDAQ:STX). Balyasny Asset Management had $422.6 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also made a $126.9 million investment in the stock during the quarter. The following funds were also among the new STX investors: Dmitry Balyasny's Balyasny Asset Management, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, and Ryan Thall's Panview Capital.

Let's go over hedge fund activity in other stocks similar to Seagate Technology Holdings plc (NASDAQ:STX). We will take a look at KeyCorp (NYSE:KEY), Entergy Corporation (NYSE:ETR), L Brands Inc (NYSE:LB), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Lyft, Inc. (NASDAQ:LYFT), Avangrid, Inc. (NYSE:AGR), and Wheaton Precious Metals Corp. (NYSE:WPM). All of these stocks' market caps match STX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KEY,40,443140,-1 ETR,31,595450,0 LB,53,6315005,-6 ALNY,33,1022981,0 LYFT,43,1385923,-17 AGR,12,46317,-3 WPM,26,471762,-2 Average,34,1468654,-4.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1469 million. That figure was $1920 million in STX's case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 12 bullish hedge fund positions. Seagate Technology Holdings plc (NASDAQ:STX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STX is 56.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately STX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); STX investors were disappointed as the stock returned -6% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.