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 more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 28th, 2019. In this article we are going to take a look at smart money sentiment towards Sprint Corporation (NYSE:S).
Is Sprint Corporation (NYSE:S) a great stock to buy now? Hedge funds are buying. The number of long hedge fund positions inched up by 1 recently. Our calculations also showed that S isn't among the 30 most popular stocks among hedge funds (see the video below). S was in 25 hedge funds' portfolios at the end of June. There were 24 hedge funds in our database with S positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to review the key hedge fund action encompassing Sprint Corporation (NYSE:S).
How have hedgies been trading Sprint Corporation (NYSE:S)?
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in S 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, Renaissance Technologies was the largest shareholder of Sprint Corporation (NYSE:S), with a stake worth $459.6 million reported as of the end of March. Trailing Renaissance Technologies was Magnetar Capital, which amassed a stake valued at $154.6 million. Arrowstreet Capital, Farallon Capital, and Paulson & Co were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key hedge funds have been driving this bullishness. Alpine Associates, managed by Robert Emil Zoellner, assembled the most outsized position in Sprint Corporation (NYSE:S). Alpine Associates had $35.6 million invested in the company at the end of the quarter. Michel Massoud's Melqart Asset Management also initiated a $14.6 million position during the quarter. The other funds with brand new S positions are Joshua Nash's Ulysses Management, Matthew Halbower's Pentwater Capital Management, and Parvinder Thiara's Athanor Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sprint Corporation (NYSE:S) but similarly valued. These stocks are Lam Research Corporation (NASDAQ:LRCX), Republic Services, Inc. (NYSE:RSG), NXP Semiconductors NV (NASDAQ:NXPI), and Southwest Airlines Co. (NYSE:LUV). All of these stocks' market caps are closest to S's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LRCX,35,1298891,3 RSG,24,635236,-6 NXPI,60,3941899,8 LUV,33,3399759,-2 Average,38,2318946,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $2319 million. That figure was $957 million in S's case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Republic Services, Inc. (NYSE:RSG) is the least popular one with only 24 bullish hedge fund positions. Sprint Corporation (NYSE:S) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately S wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); S investors were disappointed as the stock returned -6.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.