U.S. Markets closed
  • S&P 500

    4,538.43
    -38.67 (-0.84%)
     
  • Dow 30

    34,580.08
    -59.71 (-0.17%)
     
  • Nasdaq

    15,085.47
    -295.85 (-1.92%)
     
  • Russell 2000

    2,159.31
    -47.02 (-2.13%)
     
  • Crude Oil

    66.22
    -0.28 (-0.42%)
     
  • Gold

    1,782.10
    +21.40 (+1.22%)
     
  • Silver

    22.45
    +0.17 (+0.76%)
     
  • EUR/USD

    1.1317
    +0.0012 (+0.1019%)
     
  • 10-Yr Bond

    1.3430
    -0.1050 (-7.25%)
     
  • Vix

    30.67
    +2.72 (+9.73%)
     
  • GBP/USD

    1.3235
    -0.0067 (-0.5029%)
     
  • USD/JPY

    112.8000
    -0.4090 (-0.3613%)
     
  • BTC-USD

    47,357.24
    -9,273.15 (-16.37%)
     
  • CMC Crypto 200

    1,367.14
    -74.62 (-5.18%)
     
  • FTSE 100

    7,122.32
    -6.89 (-0.10%)
     
  • Nikkei 225

    28,029.57
    +276.20 (+1.00%)
     

Was The Smart Money Right About Cisco Systems, Inc. (CSCO)?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·6 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Cisco Systems, Inc. (NASDAQ:CSCO).

Is Cisco Systems, Inc. (NASDAQ:CSCO) a bargain? Hedge funds were getting more bullish. The number of bullish hedge fund bets went up by 1 lately. Cisco Systems, Inc. (NASDAQ:CSCO) was in 60 hedge funds' portfolios at the end of June. The all time high for this statistic is 68. Our calculations also showed that CSCO isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most market participants, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, We hone in on the masters of this group, approximately 850 funds. It is estimated that this group of investors handle most of the hedge fund industry's total asset base, and by following their highest performing picks, Insider Monkey has figured out several investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Charles Clough of Clough Capital Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium 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. Keeping this in mind let's take a gander at the latest hedge fund action surrounding Cisco Systems, Inc. (NASDAQ:CSCO).

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

At second quarter's end, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CSCO over the last 24 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

More specifically, Generation Investment Management was the largest shareholder of Cisco Systems, Inc. (NASDAQ:CSCO), with a stake worth $1306.4 million reported as of the end of June. Trailing Generation Investment Management was Fisher Asset Management, which amassed a stake valued at $1181.4 million. AQR Capital Management, Arrowstreet Capital, and Adage Capital 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 Generation Investment Management allocated the biggest weight to Cisco Systems, Inc. (NASDAQ:CSCO), around 5.42% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, setting aside 3.55 percent of its 13F equity portfolio to CSCO.

Now, specific money managers were breaking ground themselves. Clough Capital Partners, managed by Charles Clough, initiated the most outsized position in Cisco Systems, Inc. (NASDAQ:CSCO). Clough Capital Partners had $22 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also initiated a $5.7 million position during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Qing Li's Sciencast Management, and Matthew Hulsizer's PEAK6 Capital Management.

Let's also examine hedge fund activity in other stocks similar to Cisco Systems, Inc. (NASDAQ:CSCO). We will take a look at Eli Lilly and Company (NYSE:LLY), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NYSE:ORCL), Abbott Laboratories (NYSE:ABT), AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), and PepsiCo, Inc. (NASDAQ:PEP). All of these stocks' market caps resemble CSCO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LLY,64,2994849,9 PFE,67,2356906,2 ORCL,55,2889687,3 ABT,61,4367607,-4 T,68,2896412,5 NVS,22,1798368,3 PEP,66,5193638,5 Average,57.6,3213924,3.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 57.6 hedge funds with bullish positions and the average amount invested in these stocks was $3214 million. That figure was $4219 million in CSCO's case. AT&T Inc. (NYSE:T) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. Cisco Systems, Inc. (NASDAQ:CSCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSCO is 73.8. 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 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on CSCO as the stock returned 7.1% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Get real-time email alerts: Follow Cisco Systems Inc. (NASDAQ:CSCO)

Suggested Articles:

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