Was The Smart Money Right About International Business Machines Corp. (IBM)?
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. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider International Business Machines Corp. (NYSE:IBM) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is International Business Machines Corp. (NYSE:IBM) a superb investment right now? Money managers were taking an optimistic view. The number of long hedge fund positions increased by 11 recently. International Business Machines Corp. (NYSE:IBM) was in 51 hedge funds' portfolios at the end of December. The all time high for this statistic is 63. Our calculations also showed that IBM isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are plenty of tools stock traders use to value stocks. A duo of the most underrated tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .
Paul Tudor Jones of Tudor Investment Corp
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Do Hedge Funds Think IBM Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IBM over the last 22 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the largest position in International Business Machines Corp. (NYSE:IBM), worth close to $345 million, corresponding to 0.5% of its total 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $185.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Phill Gross and Robert Atchinson's Adage Capital Management, Israel Englander's Millennium Management and Michael Kharitonov and Jon David McAuliffe's Voleon Capital. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to International Business Machines Corp. (NYSE:IBM), around 4.72% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, setting aside 3.6 percent of its 13F equity portfolio to IBM.
Consequently, key money managers have been driving this bullishness. Voleon Capital, managed by Michael Kharitonov and Jon David McAuliffe, initiated the largest position in International Business Machines Corp. (NYSE:IBM). Voleon Capital had $44.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $35.1 million position during the quarter. The other funds with brand new IBM positions are Mikal Patel's Oribel Capital Management, Nicholas Bagnall's Te Ahumairangi Investment Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's now review hedge fund activity in other stocks similar to International Business Machines Corp. (NYSE:IBM). We will take a look at Advanced Micro Devices, Inc. (NASDAQ:AMD), TOTAL SE (NYSE:TOT), BlackRock, Inc. (NYSE:BLK), Raytheon Technologies Corp (NYSE:RTX), ServiceNow Inc (NYSE:NOW), HSBC Holdings plc (NYSE:HSBC), and Intuit Inc. (NASDAQ:INTU). This group of stocks' market valuations are similar to IBM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMD,74,6688629,3 TOT,14,980330,-4 BLK,53,1155646,14 RTX,59,2728602,4 NOW,96,6849288,14 HSBC,14,330089,4 INTU,68,4693235,14 Average,54,3346546,7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $3347 million. That figure was $998 million in IBM's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand TOTAL SE (NYSE:TOT) is the least popular one with only 14 bullish hedge fund positions. International Business Machines Corp. (NYSE:IBM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IBM is 56.8. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on IBM as the stock returned 14.2% since the end of the fourth quarter (through 4/30) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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