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Where Do Hedge Funds Stand On ZIM Integrated Shipping Services Ltd. (ZIM)?

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·6 min read
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  • ZIM

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) in this article.

ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) has experienced an increase in hedge fund sentiment recently. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ZIM 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. 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 S&P 500 ETFs by 79 percentage points since March 2017 (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.

Richard Driehaus of Driehaus Capital

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. Keeping this in mind let's view the key hedge fund action encompassing ZIM Integrated Shipping Services Ltd. (NYSE:ZIM).

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

At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 79% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ZIM over the last 24 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, 0 held the most valuable stake in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), which was worth $55.5 million at the end of the second quarter. On the second spot was Impala Asset Management which amassed $41.3 million worth of shares. Abrams Bison Investments, Marshall Wace LLP, and Renaissance Technologies 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 King Street Capital allocated the biggest weight to ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), around 4.56% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, dishing out 2.75 percent of its 13F equity portfolio to ZIM.

Now, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in ZIM Integrated Shipping Services Ltd. (NYSE:ZIM). Marshall Wace LLP had $24.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $21.1 million investment in the stock during the quarter. The following funds were also among the new ZIM investors: Richard Driehaus's Driehaus Capital, Steve Cohen's Point72 Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's also examine hedge fund activity in other stocks similar to ZIM Integrated Shipping Services Ltd. (NYSE:ZIM). We will take a look at ChampionX Corporation (NASDAQ:CHX), WESCO International, Inc. (NYSE:WCC), ASGN Incorporated (NYSE:ASGN), Armstrong World Industries, Inc. (NYSE:AWI), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Blueprint Medicines Corporation (NASDAQ:BPMC), and New York Community Bancorp, Inc. (NYSE:NYCB). This group of stocks' market caps match ZIM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHX,30,525472,2 WCC,23,1196955,-5 ASGN,15,59880,-5 AWI,17,595141,-8 RETA,18,305350,-6 BPMC,36,848485,5 NYCB,30,393811,5 Average,24.1,560728,-1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $561 million. That figure was $327 million in ZIM's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand ASGN Incorporated (NYSE:ASGN) is the least popular one with only 15 bullish hedge fund positions. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZIM is 63.8. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ZIM as the stock returned 14.9% since the end of Q2 (through 10/22) 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.