The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Telefonica S.A. (NYSE:TEF).
Is Telefonica S.A. (NYSE:TEF) ready to rally soon? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions fell by 2 lately. Our calculations also showed that TEF isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are over 8000 funds in operation at the moment, Our experts choose to focus on the bigwigs of this group, around 750 funds. These hedge fund managers shepherd most of all hedge funds' total capital, and by keeping track of their first-class investments, Insider Monkey has unsheathed a few investment strategies that have historically outrun the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to review the fresh hedge fund action surrounding Telefonica S.A. (NYSE:TEF).
What does smart money think about Telefonica S.A. (NYSE:TEF)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TEF over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is TEF A Good Stock To Buy?
Among these funds, Arrowstreet Capital held the most valuable stake in Telefonica S.A. (NYSE:TEF), which was worth $32.2 million at the end of the third quarter. On the second spot was Marshall Wace which amassed $1.5 million worth of shares. Millennium Management, Citadel Investment Group, and Balyasny Asset 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 Arrowstreet Capital allocated the biggest weight to Telefonica S.A. (NYSE:TEF), around 0.08% of its 13F portfolio. Marshall Wace is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to TEF.
Judging by the fact that Telefonica S.A. (NYSE:TEF) has witnessed a decline in interest from the smart money, logic holds that there lies a certain "tier" of funds who sold off their full holdings in the third quarter. Interestingly, Michael Gelband's ExodusPoint Capital dropped the largest position of all the hedgies watched by Insider Monkey, worth about $0.3 million in stock. Mike Vranos's fund, Ellington, also sold off its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Telefonica S.A. (NYSE:TEF) but similarly valued. We will take a look at ICICI Bank Limited (NYSE:IBN), Mizuho Financial Group Inc. (NYSE:MFG), Workday Inc (NYSE:WDAY), and Moody's Corporation (NYSE:MCO). All of these stocks' market caps resemble TEF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IBN,26,849426,-3 MFG,4,14381,-2 WDAY,39,1240146,-2 MCO,48,7835478,9 Average,29.25,2484858,0.5 [/table]
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $2485 million. That figure was $35 million in TEF's case. Moody's Corporation (NYSE:MCO) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 4 bullish hedge fund positions. Telefonica S.A. (NYSE:TEF) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TEF wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TEF investors were disappointed as the stock returned 0.3% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
