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Was The Smart Money Right About Ford Motor Company (F)?

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  • F
  • ^GSPC

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Ford Motor Company (NYSE:F).

Ford Motor Company (NYSE:F) was in 55 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 49. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. F investors should pay attention to an increase in activity from the world's largest hedge funds of late. There were 49 hedge funds in our database with F holdings at the end of March. Our calculations also showed that F isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most traders, hedge funds are viewed as worthless, outdated financial tools of the past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the crème de la crème of this group, around 850 funds. It is estimated that this group of investors command bulk of all hedge funds' total asset base, and by monitoring their finest stock picks, Insider Monkey has found many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per 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.

David E. Shaw of D.E. Shaw
David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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. With all of this in mind we're going to review the fresh hedge fund action surrounding Ford Motor Company (NYSE:F).

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

At second quarter's end, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the first quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in F a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, D E Shaw was the largest shareholder of Ford Motor Company (NYSE:F), with a stake worth $674.2 million reported as of the end of June. Trailing D E Shaw was Pzena Investment Management, which amassed a stake valued at $410.3 million. Alkeon Capital Management, 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 Lodge Hill Capital allocated the biggest weight to Ford Motor Company (NYSE:F), around 4.89% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, setting aside 4.89 percent of its 13F equity portfolio to F.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Electron Capital Partners, managed by Jos Shaver, initiated the largest position in Ford Motor Company (NYSE:F). Electron Capital Partners had $50.1 million invested in the company at the end of the quarter. Leonard Green's Leonard Green & Partners also made a $22.3 million investment in the stock during the quarter. The following funds were also among the new F investors: Clint Murray's Lodge Hill Capital, Joe DiMenna's ZWEIG DIMENNA PARTNERS, and Michael Cowley's Sandbar Asset Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Ford Motor Company (NYSE:F) but similarly valued. We will take a look at ICICI Bank Limited (NYSE:IBN), Waste Management, Inc. (NYSE:WM), Eaton Corporation plc (NYSE:ETN), Workday Inc (NASDAQ:WDAY), Itau Unibanco Holding SA (NYSE:ITUB), Ecolab Inc. (NYSE:ECL), and Northrop Grumman Corporation (NYSE:NOC). All of these stocks' market caps are similar to F's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IBN,28,2473600,-3 WM,39,3600334,7 ETN,40,1062179,-9 WDAY,72,5187481,3 ITUB,16,431689,4 ECL,48,2773469,6 NOC,42,1053366,2 Average,40.7,2368874,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.7 hedge funds with bullish positions and the average amount invested in these stocks was $2369 million. That figure was $2106 million in F's case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 16 bullish hedge fund positions. Ford Motor Company (NYSE:F) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for F is 74.8. 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 F as the stock returned 14.9% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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