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Hedge Fund and Insider Trading News: Ray Dalio, Anthony Scaramucci, Steve Cohen, David Einhorn, ...

Wed, 28 Oct 2020 17:36:42 GMT

Why Billionaire Investor Ray Dalio Hates Cash and Bonds, and Says the Election won’t Change His View on the Economy (MSN Money)
Ray Dalio, the founder, chairman and co-chief investment officer of the world’s largest hedge fund firm, Bridgewater Associates, has had a rough 2020. Bridgewater’s flagship fund has been deeply negative, even as rival hedge funds managed to outperform the market, particularly during the initial turmoil from the coronavirus pandemic. Still, Dalio does have an enviable record in his four decades in the business, and he is as provocative as ever. In an interview with Barry Ritholtz, chief investment officer of Ritholtz Wealth Management, he alludes to the difficulties his firm has faced. “The pandemic took me by surprise. I figured I didn’t have an edge on the pandemic, and that was stupid,” he said.

Steve Cohen Should Not Worry About Latest Hurdle In Pursuit Of New York Mets (Forbes)
New York City Mayor Bill de Blasio may have created a collective sense of dread among legions of Mets fans Monday when he was asked if he might try to block the sale of the Queens baseball team to billionaire hedge fund titan Steve Cohen. De Blasio told reporters in a press conference that attorneys from the New York City Law Department were doing their “due diligence” in reviewing the land lease for Citi Field, the team’s home stadium, which sits on city-owned real estate.

Billionaire Investor Stanley Druckenmiller is Said to be Shorting the US Dollar – and He Expects a Democratic Sweep this Election to Hurt Stocks in the Coming Years (Business Insider)
Billionaire investor Stanley Druckenmiller is said to be shorting the US dollar, and he believes a Democratic sweep in the upcoming election could hurt stocks in the long-term, a Bloomberg report said. “We have borrowed so much that I’m skeptical that three to five years out that equities will give us any kind of return,” Bloomberg reported Druckenmiller saying at the virtual Robin Hood Investors Conference on Tuesday. He said the prospect of higher taxes and inflation will weaken equities in the coming years.

Hedge Funds That Planned for Election Chaos See a Blue Wave (Bloomberg)
For hedge fund managers, preparations for chaos in the U.S. elections are giving way to strategies to capitalize on a sweeping Democratic victory. Just six days away from final voting, several top funds see former Vice President Joe Biden winning the presidency as well as the possibility of a so-called blue wave in which Republicans also lose control of the Senate.

Scaramucci Says Trump has United Country: ‘It Just Happens to be Against Him’ (The Hill)
Former White House communications director Anthony Scaramucci went after his former boss on Tuesday, saying President Trump has managed to unify the country against his presidency. Trump is “remarkable” at unifying the country, but he “just happens to be unifying us against him,” Scaramucci said on MSNBC during a discussion about former President Obama tearing into Trump’s record. “I applaud the president for unifying the country,” he said. “It just happens to be against him.”

David Einhorn Sees ‘Enormous Tech Bubble,’ Adds a Few Stocks to Portfolio (CNBC)
Greenlight Capital’s David Einhorn sent a dire warning on an “enormous” speculative bubble in technology stocks, saying the hedge fund has initiated a number of short positions on “second-tier” names and recent high-flying IPOs in the space.

More QuantPort Alumni Setting New Course (GreenStreet.com)
A team of former QuantPort executives is setting up a statistical-arbitrage equity shop that would operate in part from Russia. The new operation is called Red Cedar. Alexander Cherny is leading the venture as chief executive, with Christopher Dean as president and Alexander Kobrisov running a Moscow unit. It appears Red Cedar’s main office will be in the U.S., likely in New York. The firm is speaking to several large investors with an eye toward launching with more than $100 million. “They are being considered for some very big checks. If [Cherny] is successful, he will launch with a couple hundred million,” one source said. It’s likely Red Cedar would run separate accounts at the outset. But the firm also could start a hedge fund.

Why Slack Technologies (WORK) Stock is a Compelling Investment Case

Wed, 28 Oct 2020 17:27:39 GMT

Tao Value recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 7.08% for the quarter, underperforming its benchmark, the MSCI All Country World Index (ACWI) which returned 8.41% in the same quarter. You should check out Tao Value’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Tao Value highlighted a few stocks and Slack Technologies Inc. (NYSE:WORK) is one of them. Slack Technologies Inc. (NYSE:WORK) is a software company. Year-to-date, Slack Technologies Inc. (NYSE:WORK) stock gained 18.2% and on October 27th it had a closing price of $27.93. Here is what Tao Value said:

“We initiated a new position in Slack, who recently is under pressure from Microsoft Teams’ fierce competition. I have been tracking Slack since its private days and I think now is a good opportunity to buy. My thesis are: 1) Slack is a fundamentally unique tool creating substantially more value for users (albeit under-monetized) than competitors; & 2) founder/CEO Stewart Butterfield is a mindful leader with proven track record of innovation and pivoting business.

To understand what Slack really is, we need to go back to its birth. When Butterfield and his early partners were busy with their second unsuccessful stint in building a MMO (massively multiplayer) game named Glitch, they were not satisfied with how they collaborate at work using existing tools. Thus, they decide to build an internal tool to get jobs better done with integration of all you need for work, which ultimately became Slack. Microsoft Teams did a decent job in copying it, but it cannot kill Slack. Through channel checks, I found not a single Teams user enthusiastic about it (many use it as a rebranded “Lync”, or IM & conference call only, not even workflow integration), while most of Slack users are. I think the users of these two are fundamentally different based on engagements, thus should be valued differently.

Furthermore, I also believe Slack has potential to innovate and pivot, further creating value for stakeholders. Slack is not Butterfield’s first major business pivot. Interestingly, during his first unsuccessful MMO game stint, one in-game feature later evolved into the popular photo-sharing website Flickr, which eventually bought by Yahoo!. Building a product on the side later becoming a hit is no easy task, let alone having done it twice. It requires deep thinking about “how to build things right” and extraordinary rationality (think about how you, as a leader, would justify the additional resources while your main product already consumes your team entirely). I believe the new inter-corporation tool Slack Connect is a promising direction, and I expect more of such innovations.”

goodluz/Shutterstock.com

Earlier this month, we published an article revealing that Slack Technologies Inc. (NYSE:WORK) stock has underperformed the S&P 500 Index in the trailing one year period.

In Q2 2020, the number of bullish hedge fund positions on Slack Technologies Inc. (NYSE:WORK) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Slack’s growth potential. Our calculations showed that Slack Technologies Inc. (NYSE:WORK) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 enewsletter below to receive our stories in your inbox:

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

What to Do with Pinduoduo (PDD) Stock Right Now?

Wed, 28 Oct 2020 17:07:17 GMT

In the said letter, Tao Value highlighted a few stocks and Pinduoduo Inc. (NASDAQ:PDD) is one of them. Pinduoduo Inc. (NASDAQ:PDD) engages in the development and management of an e-commerce platform. Year-to-date, Pinduoduo Inc. (NASDAQ:PDD) stock gained 134.8% and on October 27th it had a closing price of $90.31. Here is what Tao Value said:

“Pinduoduo (ticker: PDD) dragged 93 bps this quarter. Investors had high expectation on Pinduoduo coming into this quarter, yet the reported Q2 GMV & revenue fell short of such hype. The stock dropped 14% on the earnings day alone. On business side, management indicated its strategic shift to develop technology solutions for the vast, yet under-digitalized agriculture value chain in China. I think it is a difficult but meaningful problem to tackle.”

Stanisic Vladimir/Shutterstock.com

In June, we published an article revealing Tao Value’s bullish investment thesis on Pinduoduo Inc. (NASDAQ:PDD) stock in its Q4 2019 investor letter. This suggests that the investment firm has been bullish for a long time on Pinduoduo Inc. (NASDAQ:PDD).

In Q2 2020, the number of bullish hedge fund positions on Pinduoduo Inc. (NASDAQ:PDD) stock increased by about 7% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Pinduoduo’s growth potential. Our calculations showed that Pinduoduo Inc. (NASDAQ:PDD) isn’t ranked among the 30 most popular stocks among hedge funds.

Video: Top 5 Stocks Among Hedge Funds

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

Why Gilead Sciences (GILD) Stock is a Compelling Investment Case

Wed, 28 Oct 2020 16:38:12 GMT

In the said letter, Tao Value highlighted a few stocks and Gilead Sciences Inc (NASDAQ:GILD) is one of them. Gilead Sciences Inc (NASDAQ:GILD) is a biotechnology company. Year-to-date, Gilead Sciences Inc (NASDAQ:GILD) stock lost 9.7% and on October 27th it had a closing price of $60.01. Here is what Tao Value said:

“On the detracting side, our largest detractor is Gilead Sciences (ticker: GILD), which dragged 104 bps. Gilead reported a lackluster Q2, falling short of earning estimate by relatively large margin. It however it raised its full year revenue and earning guidance, possibly due to incremental Remdesivir revenue in 2nd half year. Gilead also announced a big acquisition of Immunomedics for $21 billion. Through this acquisition, Gilead will add Immunomedics’ crown asset Trodelvy to its oncology pipeline and expect it could be significantly accretive to earnings since 2023. The share price decline might be due to COVID19 themed traders seek exit after a good run. I didn’t see changes to our original thesis.”

Tonhom1009/Shutterstock.com

Last month, we published an article revealing that biotech stocks are poised for massive future growth.

In Q2 2020, the number of bullish hedge fund positions on Gilead Sciences Inc (NASDAQ:GILD) stock decreased by about 11% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Gilead’s growth potential. Our calculations showed that Gilead Sciences Inc (NASDAQ:GILD) isn’t ranked among the 30 most popular stocks among hedge funds.

Video: Top 5 Stocks Among Hedge Funds

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

Was The Smart Money Right About Verisign, Inc. (VRSN)?

Wed, 28 Oct 2020 16:19:02 GMT

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Verisign, Inc. (NASDAQ:VRSN).

Is Verisign, Inc. (NASDAQ:VRSN) the right pick for your portfolio? The smart money was in an optimistic mood. The number of bullish hedge fund bets rose by 6 recently. Verisign, Inc. (NASDAQ:VRSN) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VRSN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 41 hedge funds in our database with VRSN holdings at the end of March.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Gelband of ExodusPoint Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s review the recent hedge fund action surrounding Verisign, Inc. (NASDAQ:VRSN).

What have hedge funds been doing with Verisign, Inc. (NASDAQ:VRSN)?

Heading into the third quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VRSN over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of Verisign, Inc. (NASDAQ:VRSN), with a stake worth $2650.7 million reported as of the end of September. Trailing Berkshire Hathaway was Renaissance Technologies, which amassed a stake valued at $1512.1 million. D E Shaw, Cantillon Capital Management, and Palestra Capital 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 Atalan Capital allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 10.93% of its 13F portfolio. Highside Global Management is also relatively very bullish on the stock, designating 10.03 percent of its 13F equity portfolio to VRSN.

Now, key hedge funds have jumped into Verisign, Inc. (NASDAQ:VRSN) headfirst. Palestra Capital Management, managed by Andrew Immerman and Jeremy Schiffman, assembled the biggest position in Verisign, Inc. (NASDAQ:VRSN). Palestra Capital Management had $163.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $9.4 million position during the quarter. The following funds were also among the new VRSN investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Michael Gelband’s ExodusPoint Capital, and Anthony S. Daffer’s Provenire Capital.

Let’s check out hedge fund activity in other stocks similar to Verisign, Inc. (NASDAQ:VRSN). We will take a look at Moderna, Inc. (NASDAQ:MRNA), Motorola Solutions Inc (NYSE:MSI), V.F. Corporation (NYSE:VFC), Parker-Hannifin Corporation (NYSE:PH), Twitter Inc (NYSE:TWTR), Marvell Technology Group Ltd. (NASDAQ:MRVL), and American Water Works Company, Inc. (NYSE:AWK). All of these stocks’ market caps resemble VRSN’s market cap.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
MRNA	37	788433	12
MSI	36	535822	2
VFC	27	558958	8
PH	39	1172205	7
TWTR	68	1278023	13
MRVL	41	664690	12
AWK	30	653000	0
Average	39.7	807304	7.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.7 hedge funds with bullish positions and the average amount invested in these stocks was $807 million. That figure was $6246 million in VRSN’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand V.F. Corporation (NYSE:VFC) is the least popular one with only 27 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRSN is 64.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately VRSN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on VRSN were disappointed as the stock returned -2.9% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

Were Hedge Funds Wrong About Piling Into Las Vegas Sands Corp. (LVS)?

Wed, 28 Oct 2020 16:18:37 GMT

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Las Vegas Sands Corp. (NYSE:LVS).

Las Vegas Sands Corp. (NYSE:LVS) was in 47 hedge funds’ portfolios at the end of June. The all time high for this statistics is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. LVS has experienced an increase in hedge fund interest recently. There were 42 hedge funds in our database with LVS holdings at the end of March. Our calculations also showed that LVS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are perceived as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the top tier of this club, around 850 funds. It is estimated that this group of investors have their hands on the majority of the smart money’s total asset base, and by observing their matchless stock picks, Insider Monkey has revealed several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a look at the latest hedge fund action surrounding Las Vegas Sands Corp. (NYSE:LVS).

What does smart money think about Las Vegas Sands Corp. (NYSE:LVS)?

At Q2’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in LVS a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Daniel Sundheim’s D1 Capital Partners has the largest position in Las Vegas Sands Corp. (NYSE:LVS), worth close to $721.4 million, comprising 5.4% of its total 13F portfolio. On D1 Capital Partners’s heels is Viking Global, led by Andreas Halvorsen, holding a $506.6 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Gabriel Plotkin’s Melvin Capital Management, Ken Griffin’s Citadel Investment Group and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Cumberland Associates / Springowl Associates allocated the biggest weight to Las Vegas Sands Corp. (NYSE:LVS), around 33.92% of its 13F portfolio. D1 Capital Partners is also relatively very bullish on the stock, setting aside 5.38 percent of its 13F equity portfolio to LVS.

As aggregate interest increased, key hedge funds have been driving this bullishness. Long Pond Capital, managed by John Khoury, established the largest position in Las Vegas Sands Corp. (NYSE:LVS). Long Pond Capital had $87.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $36.9 million position during the quarter. The other funds with new positions in the stock are John Brennan’s Sirios Capital Management, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Las Vegas Sands Corp. (NYSE:LVS) but similarly valued. We will take a look at Canadian Pacific Railway Limited (NYSE:CP), Eni SpA (NYSE:E), Kinder Morgan Inc (NYSE:KMI), Sempra Energy (NYSE:SRE), Snap Inc. (NYSE:SNAP), The Bank of New York Mellon Corporation (NYSE:BK), and Bank of Montreal (NYSE:BMO). All of these stocks’ market caps resemble LVS’s market cap.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
CP	36	1635509	4
E	8	43125	3
KMI	50	1090828	3
SRE	35	635290	8
SNAP	49	1601957	1
BK	48	4431288	-4
BMO	13	107019	0
Average	34.1	1363574	2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $1364 million. That figure was $2397 million in LVS’s case. Kinder Morgan Inc (NYSE:KMI) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 8 bullish hedge fund positions. Las Vegas Sands Corp. (NYSE:LVS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LVS is 86.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately LVS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LVS were disappointed as the stock returned 11.3% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

Was The Smart Money Right About Northrop Grumman Corporation (NOC)?

Wed, 28 Oct 2020 16:18:03 GMT

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 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 Northrop Grumman Corporation (NYSE:NOC) in this article.

Northrop Grumman Corporation (NYSE:NOC) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. NOC has seen an increase in enthusiasm from smart money recently. There were 45 hedge funds in our database with NOC positions at the end of the first quarter. Our calculations also showed that NOC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phillip Gross of Adage Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let’s check out the new hedge fund action surrounding Northrop Grumman Corporation (NYSE:NOC).

Hedge fund activity in Northrop Grumman Corporation (NYSE:NOC)

Heading into the third quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 37 hedge funds with a bullish position in NOC a year ago. So, let’s check 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, Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners has the number one position in Northrop Grumman Corporation (NYSE:NOC), worth close to $291.4 million, corresponding to 3.7% of its total 13F portfolio. On Soroban Capital Partners’s heels is Panayotis Takis Sparaggis of Alkeon Capital Management, with a $112.8 million position; 0.3% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Israel Englander’s Millennium Management, and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to Northrop Grumman Corporation (NYSE:NOC), around 8.37% of its 13F portfolio. Soroban Capital Partners is also relatively very bullish on the stock, dishing out 3.73 percent of its 13F equity portfolio to NOC.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the biggest position in Northrop Grumman Corporation (NYSE:NOC). Adage Capital Management had $23.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Chen Tianqiao’s Shanda Asset Management, and Jinghua Yan’s TwinBeech Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Northrop Grumman Corporation (NYSE:NOC) but similarly valued. We will take a look at Global Payments Inc (NYSE:GPN), Sea Limited (NYSE:SE), Truist Financial Corporation (NYSE:TFC), CNOOC Limited (NYSE:CEO), Boston Scientific Corporation (NYSE:BSX), Intercontinental Exchange Inc (NYSE:ICE), and The Bank of Nova Scotia (NYSE:BNS). All of these stocks’ market caps are closest to NOC’s market cap.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
GPN	66	3311740	-1
SE	82	6358325	6
TFC	33	287639	-1
CEO	13	166646	2
BSX	66	2312667	7
ICE	60	2754652	-1
BNS	13	252173	1
Average	47.6	2206263	1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.6 hedge funds with bullish positions and the average amount invested in these stocks was $2206 million. That figure was $990 million in NOC’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 13 bullish hedge fund positions. Northrop Grumman Corporation (NYSE:NOC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NOC is 61.6. 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. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and surpassed the market by 21 percentage points. Unfortunately NOC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NOC investors were disappointed as the stock returned 0.7% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

Were Hedge Funds Wrong About TransUnion (TRU)?

Wed, 28 Oct 2020 16:17:38 GMT

In this article we will take a look at whether hedge funds think TransUnion (NYSE:TRU) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

TransUnion (NYSE:TRU) investors should be aware of an increase in activity from the world’s largest hedge funds of late. TransUnion (NYSE:TRU) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 44 hedge funds in our database with TRU positions at the end of the first quarter. Our calculations also showed that TRU isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ian Wace of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the recent hedge fund action encompassing TransUnion (NYSE:TRU).

How are hedge funds trading TransUnion (NYSE:TRU)?

At second quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in TRU a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of TransUnion (NYSE:TRU), with a stake worth $295.4 million reported as of the end of September. Trailing Citadel Investment Group was Select Equity Group, which amassed a stake valued at $284 million. Marshall Wace LLP, Palestra Capital Management, and Farallon Capital 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 Lansing Management allocated the biggest weight to TransUnion (NYSE:TRU), around 15.64% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, earmarking 3.96 percent of its 13F equity portfolio to TRU.

As industrywide interest jumped, some big names were leading the bulls’ herd. Select Equity Group, managed by Robert Joseph Caruso, established the largest position in TransUnion (NYSE:TRU). Select Equity Group had $284 million invested in the company at the end of the quarter. Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management also made a $105.3 million investment in the stock during the quarter. The other funds with brand new TRU positions are James Parsons’s Junto Capital Management, Robert Pohly’s Samlyn Capital, and Sander Gerber’s Hudson Bay Capital Management.

Let’s check out hedge fund activity in other stocks similar to TransUnion (NYSE:TRU). We will take a look at Northern Trust Corporation (NASDAQ:NTRS), Restaurant Brands International Inc (NYSE:QSR), Yandex NV (NASDAQ:YNDX), Peloton Interactive, Inc. (NASDAQ:PTON), CGI Inc. (NYSE:GIB), Fox Corporation (NASDAQ:FOX), and Fox Corporation (NASDAQ:FOXA). This group of stocks’ market valuations match TRU’s market valuation.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
NTRS	35	449745	8
QSR	44	2868475	3
YNDX	44	1403652	9
PTON	50	2109831	14
GIB	19	259686	1
FOX	20	566122	-2
FOXA	35	1611691	-3
Average	35.3	1324172	4.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $1324 million. That figure was $1629 million in TRU’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 19 bullish hedge fund positions. TransUnion (NYSE:TRU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRU is 83.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately TRU wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TRU were disappointed as the stock returned -1.1% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

Was The Smart Money Right About Norfolk Southern Corp. (NSC)?

Wed, 28 Oct 2020 16:17:04 GMT

Keeping this in mind, let’s analyze whether Norfolk Southern Corp. (NYSE:NSC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

Norfolk Southern Corp. (NYSE:NSC) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Norfolk Southern Corp. (NYSE:NSC) was in 47 hedge funds’ portfolios at the end of June. The all time high for this statistics is 54. Our calculations also showed that NSC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Keith Meister of Corvex Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Now let’s view the key hedge fund action surrounding Norfolk Southern Corp. (NYSE:NSC).

How are hedge funds trading Norfolk Southern Corp. (NYSE:NSC)?

At second quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. By comparison, 54 hedge funds held shares or bullish call options in NSC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of Norfolk Southern Corp. (NYSE:NSC), with a stake worth $139.6 million reported as of the end of September. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $101.5 million. Fisher Asset Management, Corvex Capital, and Suvretta Capital 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 Norfolk Southern Corp. (NYSE:NSC), around 7.84% of its 13F portfolio. Corvex Capital is also relatively very bullish on the stock, earmarking 5.34 percent of its 13F equity portfolio to NSC.

Because Norfolk Southern Corp. (NYSE:NSC) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers that decided to sell off their full holdings heading into Q3. Interestingly, Andreas Halvorsen’s Viking Global sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $258.1 million in stock. Eric W. Mandelblatt and Gaurav Kapadia’s fund, Soroban Capital Partners, also dropped its stock, about $160.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Norfolk Southern Corp. (NYSE:NSC) but similarly valued. These stocks are Waste Management, Inc. (NYSE:WM), The PNC Financial Services Group, Inc. (NYSE:PNC), Aon plc (NYSE:AON), Atlassian Corporation Plc (NASDAQ:TEAM), Honda Motor Co Ltd (NYSE:HMC), Workday Inc (NASDAQ:WDAY), and Edwards Lifesciences Corporation (NYSE:EW). All of these stocks’ market caps are closest to NSC’s market cap.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
WM	39	2844869	-1
PNC	52	1108094	12
AON	57	4755205	10
TEAM	55	2872691	-4
HMC	10	296833	2
WDAY	73	3444523	15
EW	45	1391002	-4
Average	47.3	2387602	4.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.3 hedge funds with bullish positions and the average amount invested in these stocks was $2388 million. That figure was $867 million in NSC’s case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (NYSE:HMC) is the least popular one with only 10 bullish hedge fund positions. Norfolk Southern Corp. (NYSE:NSC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NSC is 56.5. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and still beat the market by 21 percentage points. A small number of hedge funds were also right about betting on NSC as the stock returned 23.3% since the end of the second quarter (through 10/23) and outperformed the market by an even larger margin.

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

Was The Smart Money Right About Advance Auto Parts, Inc. (AAP)?

Wed, 28 Oct 2020 16:16:26 GMT

Is Advance Auto Parts, Inc. (NYSE:AAP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Advance Auto Parts, Inc. (NYSE:AAP) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 62. AAP has seen an increase in activity from the world’s largest hedge funds lately. There were 38 hedge funds in our database with AAP positions at the end of the first quarter. Our calculations also showed that AAP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Louis Bacon of Moore Global Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a peek at the new hedge fund action encompassing Advance Auto Parts, Inc. (NYSE:AAP).

What have hedge funds been doing with Advance Auto Parts, Inc. (NYSE:AAP)?

At Q2’s end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AAP over the last 20 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Melvin Capital Management was the largest shareholder of Advance Auto Parts, Inc. (NYSE:AAP), with a stake worth $551.2 million reported as of the end of September. Trailing Melvin Capital Management was Starboard Value LP, which amassed a stake valued at $366.6 million. D1 Capital Partners, Melvin Capital Management, 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 Starboard Value LP allocated the biggest weight to Advance Auto Parts, Inc. (NYSE:AAP), around 13.06% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, designating 6.56 percent of its 13F equity portfolio to AAP.

Now, specific money managers have jumped into Advance Auto Parts, Inc. (NYSE:AAP) headfirst. D1 Capital Partners, managed by Daniel Sundheim, initiated the biggest position in Advance Auto Parts, Inc. (NYSE:AAP). D1 Capital Partners had $133.2 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $26.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Gregg Moskowitz’s Interval Partners, and Anthony Joseph Vaccarino’s North Fourth Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Advance Auto Parts, Inc. (NYSE:AAP) but similarly valued. We will take a look at NetApp Inc. (NASDAQ:NTAP), Darden Restaurants, Inc. (NYSE:DRI), HubSpot Inc (NYSE:HUBS), Avantor, Inc. (NYSE:AVTR), Qiagen NV (NYSE:QGEN), China Southern Airlines Co Ltd (NYSE:ZNH), and RPM International Inc. (NYSE:RPM). This group of stocks’ market valuations are closest to AAP’s market valuation.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
NTAP	25	465896	-1
DRI	49	1202504	-3
HUBS	41	867564	14
AVTR	34	646574	5
QGEN	32	652397	2
ZNH	2	7852	0
RPM	26	108615	4
Average	29.9	564486	3

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $1507 million in AAP’s case. Darden Restaurants, Inc. (NYSE:DRI) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 bullish hedge fund positions. Advance Auto Parts, Inc. (NYSE:AAP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AAP is 80.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately AAP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on AAP were disappointed as the stock returned 8.8% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

Was The Smart Money Right About Yum! Brands, Inc. (YUM)?

Wed, 28 Oct 2020 16:15:54 GMT

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Yum! Brands, Inc. (NYSE:YUM)? The smart money sentiment can provide an answer to this question.

Yum! Brands, Inc. (NYSE:YUM) investors should be aware of an increase in enthusiasm from smart money lately. Yum! Brands, Inc. (NYSE:YUM) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 65. There were 41 hedge funds in our database with YUM positions at the end of the first quarter. Our calculations also showed that YUM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Stanley Druckenmiller of Duquesne Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the key hedge fund action regarding Yum! Brands, Inc. (NYSE:YUM).

How have hedgies been trading Yum! Brands, Inc. (NYSE:YUM)?

At the end of the second quarter, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the first quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in YUM 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, Citadel Investment Group was the largest shareholder of Yum! Brands, Inc. (NYSE:YUM), with a stake worth $282.2 million reported as of the end of September. Trailing Citadel Investment Group was Millennium Management, which amassed a stake valued at $188.9 million. Melvin Capital Management, Alkeon Capital Management, and Two Sigma Advisors 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 Incline Global Management allocated the biggest weight to Yum! Brands, Inc. (NYSE:YUM), around 6.54% of its 13F portfolio. Becker Drapkin Management is also relatively very bullish on the stock, designating 3.97 percent of its 13F equity portfolio to YUM.

Consequently, key money managers were leading the bulls’ herd. Junto Capital Management, managed by James Parsons, created the biggest position in Yum! Brands, Inc. (NYSE:YUM). Junto Capital Management had $90.9 million invested in the company at the end of the quarter. Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners also made a $89.7 million investment in the stock during the quarter. The following funds were also among the new YUM investors: Doug Silverman and Alexander Klabin’s Senator Investment Group, Louis Bacon’s Moore Global Investments, and Stanley Druckenmiller’s Duquesne Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Yum! Brands, Inc. (NYSE:YUM) but similarly valued. These stocks are Republic Services, Inc. (NYSE:RSG), KKR & Co Inc. (NYSE:KKR), Datadog, Inc. (NASDAQ:DDOG), Hormel Foods Corporation (NYSE:HRL), PACCAR Inc (NASDAQ:PCAR), AFLAC Incorporated (NYSE:AFL), and Suncor Energy Inc. (NYSE:SU). This group of stocks’ market valuations match YUM’s market valuation.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
RSG	37	821669	5
KKR	45	3339623	-3
DDOG	57	2363237	13
HRL	27	440889	-1
PCAR	30	244385	-8
AFL	34	588093	2
SU	29	845050	-1
Average	37	1234707	1

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1235 million. That figure was $1633 million in YUM’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 27 bullish hedge fund positions. Yum! Brands, Inc. (NYSE:YUM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for YUM is 65. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Hedge funds were also right about betting on YUM as the stock returned 17.1% since the end of Q2 (through 10/23) 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.

Were Hedge Funds Right About Crowding Into Deckers Outdoor Corp (DECK)?

Wed, 28 Oct 2020 16:15:28 GMT

Deckers Outdoor Corp (NYSE:DECK) shareholders have witnessed an increase in hedge fund sentiment recently. Deckers Outdoor Corp (NYSE:DECK) was in 47 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 31 hedge funds in our database with DECK positions at the end of the first quarter. Our calculations also showed that DECK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 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.

Ken Heebner of Capital Growth Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let’s take a gander at the recent hedge fund action encompassing Deckers Outdoor Corp (NYSE:DECK).

What have hedge funds been doing with Deckers Outdoor Corp (NYSE:DECK)?

Heading into the third quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 52% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DECK over the last 20 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Gabriel Plotkin’s Melvin Capital Management has the largest position in Deckers Outdoor Corp (NYSE:DECK), worth close to $142.4 million, accounting for 0.8% of its total 13F portfolio. The second largest stake is held by Steadfast Capital Management, managed by Robert Pitts, which holds a $104.2 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Cliff Asness’s AQR Capital Management, Renaissance Technologies and James Woodson Davis’s Woodson Capital Management. In terms of the portfolio weights assigned to each position Miura Global Management allocated the biggest weight to Deckers Outdoor Corp (NYSE:DECK), around 7.78% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, designating 5.29 percent of its 13F equity portfolio to DECK.

Consequently, key hedge funds have jumped into Deckers Outdoor Corp (NYSE:DECK) headfirst. Steadfast Capital Management, managed by Robert Pitts, created the most valuable position in Deckers Outdoor Corp (NYSE:DECK). Steadfast Capital Management had $104.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $20 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Heebner’s Capital Growth Management, Angela Aldrich’s Bayberry Capital Partners, and David Ma’s Composite Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Deckers Outdoor Corp (NYSE:DECK). We will take a look at Steel Dynamics, Inc. (NASDAQ:STLD), CACI International Inc (NYSE:CACI), Pearson PLC (NYSE:PSO), Arrow Electronics, Inc. (NYSE:ARW), Quanta Services Inc (NYSE:PWR), BWX Technologies Inc (NYSE:BWXT), and Reinsurance Group of America Inc (NYSE:RGA). This group of stocks’ market valuations resemble DECK’s market valuation.

Ticker	No of HFs with positions	Total Value of HF Positions (x1000)	Change in HF Position
STLD	30	370392	3
CACI	34	395916	9
PSO	7	14870	-1
ARW	29	531930	6
PWR	31	624315	3
BWXT	27	141453	3
RGA	33	240555	3
Average	27.3	331347	3.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $858 million in DECK’s case. CACI International Inc (NYSE:CACI) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Deckers Outdoor Corp (NYSE:DECK) is more popular among hedge funds. Our overall hedge fund sentiment score for DECK is 90. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 30% in 2020 through October 23rd but still managed to beat the market by 21 percentage points. Hedge funds were also right about betting on DECK as the stock returned 30% since the end of June (through 10/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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If You Own Ollie’s Bargain Outlet (OLLI) Stock, Should You Sell It Now?

Wed, 28 Oct 2020 15:59:08 GMT

Steel City Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter of 2020, the fund returned 1.6% net of fees, while the S&P 500 Index was up 8.5%. You should check out Steel City Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Steel City Capital highlighted a few stocks and Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI) is one of them. Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI) is a discount store company. Year-to-date, Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI) stock gained 41.1% and on October 27th it had a closing price of $92.14. Here is what Steel City Capital said:

“Ollie’s Bargain Outlet (Short): OLLI delivered a blowout second quarter – same store sales were up 43.3% and overall sales were up 58.5%, operating income tripled, and the company generated more than $160 million of free cash flow. Current conventional wisdom is the company’s position as a bargain retailer in the middle of a recession should support improving financial performance and thus its stock price. But in reality, shares are down nearly 15% since the company reported second quarter results. What gives?

Underpinning OLLI’s robust cash generation was strong sell through of existing inventory. At the end of the second quarter, inventory sat at ~$895,000 per store, more than 10% below the company’s three-year average of approximately $1,000,000 per store. At first blush, declining inventory would seem like a positive, particularly given my prior contention that OLLI was over-inventoried late last year. But today, the pendulum has swung too far in the opposite direction. With sales on track to grow at a mid-teens clip in the third quarter, I anticipate store-level inventory metrics will further deteriorate.

Absent the ability to quickly restock – which is challenging given the current speed of the treadmill – OLLI will likely struggle to maintain positive comps over the next several quarters and will face particular challenges in 2Q and 3Q of FY’2021. OLLI currently trades at 31x next year’s earnings, in-line with the company’s 3- and 5-year averages, which I believe makes for an attractive short position given the fundamental outlook.”

Nejron Photo/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI) stock increased by about 26% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Ollie’s Bargain Outlet’s growth potential. Our calculations showed that Ollie’s Bargain Outlet Holdings Inc. (NASDAQ:OLLI) isn’t ranked among the 30 most popular stocks among hedge funds.

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If You Own Hanesbrands (HBI) Stock, Should You Sell It Now?

Wed, 28 Oct 2020 15:57:40 GMT

In the said letter, Steel City Capital highlighted a few stocks and Hanesbrands Inc. (NYSE:HBI) is one of them. Hanesbrands Inc. (NYSE:HBI) is a clothing company. Year-to-date, Hanesbrands Inc. (NYSE:HBI) stock gained 17.9% and on October 27th it had a closing price of $17.50. Here is what Steel City Capital said:

“Hanesbrands (Short): HBI has been somewhat of a permanent fixture in the Partnership’s short book over the past two years. I have long believed that various aspects of the bull thesis – it’s cheap, everyone wears underwear, and Buffett owns Fruit of the Loom – are lazy and half-baked justifications for owning the stock. The investment proposition is substantially more nuanced and less attractive. Competition from private label offerings and new brand names have slowly been chipping away at HBI’s market share. The company is somewhat hamstrung in its ability to shift sales to the likes of Amazon given their heavy reliance on Wal-Mart and other brick-and-mortar retailers. Demand is anything but stable in downturns, a point illustrated by second quarter results. And lastly, HBI’s heavy reliance on company owned manufacturing facilities has embedded a high degree of operating leverage in the company’s cost structure.

It is this last point – operating leverage – that is perhaps most underappreciated by longs. Part of the company’s multiyear acquisition program has been predicated on consolidating manufacturing into existing facilities, thereby increasing their utilization and enabling HBI to better absorb fixed costs at the plants. Management has highlighted that approximately three fourths of the units it sells are manufactured at company facilities and they trumpet the mantra “volume up, unit costs down.” But this relationship works in reverse, too. Volume down, unit costs up.

During the second quarter, the company dodged a big bullet on this front. Sales came in at $1.74 billion, barely changed from $1.76 billion in the prior comparable period. Operating profit of $241.5 million was actually up 18.6% year-over-year. What happened? Revenue included a $752 million benefit from the sale of protective garments and facemasks (PPE). Absent the contribution from PPE, sales would have fallen 40%. Perhaps more instructive is the experience of HBI’s Activewear segment which did not book any PPE sales during the quarter. On a 52% revenue decline, segment operating profit fell more than 110%. Without PPE sales, operating profits would have been crushed across the board.

HBI’s outlook is considerably gloomier than 2Q’20 results suggest. Management noted the potential for a much reduced $150 million of PPE sales in the second half, U.S. apparel imports remain in negative territory, and back-toschool demand was hurt as educational institutions embraced distance learning. And while not issuing formal guidance, management noted, “While we continue to tightly manage SG&A expenses, the amount of temporary cost savings from the second quarter are currently not expected to repeat in the second half. Combined with a lower overall unit and sales volume, we believe it is reasonable to assume year-over-year pressure on margins in both this third and fourth quarters.” Volume down, unit costs up.

From a valuation perspective, shares are trading at 11.0x next years’ estimated earnings. At best, this is “in-line” with the five-year average of 10.2x, but it’s worth noting the long-term average is biased upwards by late 2015 figures which were influenced by considerably higher organic sales growth and non-fundamental demand for shares following HBI’s addition to the S&P 500. Viewed over a shorter three-year window, HBI has traded with an average multiple of 9.2x forward year earnings. At 11.0x – about one standard deviation above the three-year mean – shares are trading fairly rich. Such a valuation would be justified if the company were expecting improving organic sales growth and unit profitability, but there’s little reason to believe anything of the sort is right around the corner.”

wavebreakmedia/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on Hanesbrands Inc. (NYSE:HBI) stock decreased by about 14% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Hanesbrands’s growth potential. Our calculations showed that Hanesbrands Inc. (NYSE:HBI) isn’t ranked among the 30 most popular stocks among hedge funds.

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If You Own Trupanion (TRUP) Stock, Should You Sell It Now?

Wed, 28 Oct 2020 15:56:17 GMT

In the said letter, Steel City Capital highlighted a few stocks and Trupanion Inc. (NASDAQ:TRUP) is one of them. Trupanion Inc. (NASDAQ:TRUP) is a pet insurance provider. Year-to-date, Trupanion Inc. (NASDAQ:TRUP) stock gained 94% and on October 27th it had a closing price of $72.66. Here is what Steel City Capital said:

“Trupanion (Short): TRUP remains a frustrating short for the Partnership. While already underwater before the 2Q’20 print, the position added insult to injury when shares immediately added more than 20% on the back of what I viewed as an underwhelming earnings print. Management guided total revenue higher by ~$14 million, inclusive of $9 million from the “Other” business and $5 million from the company’s core insurance business.

The best the company could offer up in the way of additional profitability was an incremental $1 million of “adjusted operating margin,” which importantly, is reported before pet acquisition costs (PAC). Guidance was taken from $55 million to $56 million, which is still below the $57 million guided to at the beginning of the year. The full $1 million is coming from TRUP’s core insurance business, with the incremental $9 million of “Other” segment revenue coming without any material profit. Because TRUP has promoted itself as a SaaS-like business, investors are unfazed by the prospect of revenue growth without profits. When you’re valued on the basis of EV/Sales – as opposed to traditional insurance metrics like P/B or P/E – sales growth is paramount. Here on planet earth, TRUP’s shares trade at 1,830x next year’s earnings and 15.7x P/B.

I continue to expect that over the medium term, fundamentals will roll over, thereby depriving this high-growth story of the oxygen it requires to remain on fire. Specifically, I believe TRUP will become increasingly squeezed on both ends of its P&L. Starting with revenue, there continues to be a growing number of competitors entering the market. In many cases, their policies are priced more attractively than the company’s. TRUP can’t afford to cut premiums – its loss ratios won’t allow it – and over time the rising competition should place pressure on both its gross adds as well as churn.

Additionally, rising competition is becoming increasingly evident in the company’s pet acquisition spend. While the company increased guidance for its “adjusted operating margin,” pet acquisition costs are trending disastrously in the wrong direction. During 1H’20, PAC averaged $222, artificially held down by spend of only $199 in the pandemicafflicted second quarter. Management still expects full year average PAC to range from $240-$270, implying an average of $290 in the second half. While management raised revenue and pre-PAC profit targets, there will be very little left over for shareholders after properly accounting for all of the company’s expenses. This is hardly the kind of outlook that justifies the stock’s performance following its second quarter print.

There is another problem. With PAC exploding, the company will quickly find itself outside of its target IRR range of 30-40%. Basic math implies the company will likely end the year spending $300+ per pet in the fourth quarter if PAC is to average $290 in the second half. At these levels, 4Q’20 spend will be 35% higher than the prior comparable period. This rate of growth is unsustainable, and as we progress through 2021, rising PAC will drive IRRs well below 30%. The company will be faced with two choices: Either slow growth to maintain its target IRRs, or maintain growth with economics diminished by higher PAC spend. I don’t believe either will be pretty for the stock.”

zakalinka/Shutterstock.com

In Q1 2020, the number of bullish hedge fund positions on Trupanion Inc. (NASDAQ:TRUP) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Trupanion Inc. (NASDAQ:TRUP) isn’t ranked among the 30 most popular stocks among hedge funds.

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Why TC Pipelines (TCP) Stock is a Compelling Investment Case

Wed, 28 Oct 2020 15:54:53 GMT

In the said letter, Steel City Capital highlighted a few stocks and TC Pipelines LP (NYSE:TCP) is one of them. TC Pipelines LP (NYSE:TCP) is a natural gas transmission company. Year-to-date, TC Pipelines LP (NYSE:TCP) stock lost 30.4% and on October 27th it had a closing price of $29.13. Here is what Steel City Capital said:

“TC Pipelines (Long): When I initiated a position in TCP in late March, I did so because the shares were a screaming buy. At the time, TCP’s P/E and P/FCF multiples were sub-7x and shares offered a safe dividend yield in excess of 12.0%. Despite a rebound to low-$30s (a gain of roughly 50% on our cost basis), shares remain extremely attractive for a business characterized by a high degree of cash flow visibility and strong investment-grade counterparties.

Apparently TCP’s corporate parent – Canadian-based TC Energy – knows a bargain when they see it as well. They recently offered to acquire all of TCP’s outstanding shares at a price of $27.31. I view this offer as an opportunistic attempt to purchase all of TCP at a steep discount to the company’s intrinsic value and published an open letter to the company’s Board of Directors. The full text of the letter is attached as Appendix A. Any deal requires the approval of a majority of current shareholders and the top of TCP’s register is highly concentrated. The top 5 shareholders will have considerable sway in how the situation unfolds and I remain optimistic that they will push for a more appropriate valuation.”

In April, we published an article revealing Steel City Capital’s bullish investment thesis on TC Pipelines LP (NYSE:TCP) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on TC Pipelines LP (NYSE:TCP).

Our calculations showed that TC Pipelines LP (NYSE:TCP) isn’t ranked among the 30 most popular stocks among hedge funds.

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Is eBay Inc (EBAY) a Smart Long-term Buy?

Wed, 28 Oct 2020 15:53:22 GMT

In the said letter, Steel City Capital highlighted a few stocks and eBay Inc (NASDAQ:EBAY) is one of them. eBay Inc (NASDAQ:EBAY) is an e-commerce company. Year-to-date, eBay Inc (NASDAQ:EBAY) stock gained 48.3% and on October 27th it had a closing price of $53.55. Here is what Steel City Capital said:

“EBAY (Long): The Partnership has taken some profits in EBAY although our position remains sizeable at 10% of capital. A substantial portion of the investment thesis has played out, namely that activist-owner Elliot Management would instigate the sale of both StubHub and EBAY’s portfolio of classified businesses. The sale of StubHub was completed in early 2020 for net cash proceeds of ~$3.1 billion, and in the third quarter, the company announced it had entered into an agreement to sell the classifieds portfolio to Adevinta (ADE) for $2.0 billion of net cash and ~$6.7 billion worth of shares. The market responded positively to ADE’s acquisition and today the share-based consideration is worth ~$9.0 billion.

With a key component of the thesis realized, why not completely exit the position? The answer is what remains – the core EBAY marketplace – continues to trade at a modest price relative to its cash generating capacity. At the shares’ current price of $53, EBAY’s market capitalization is $37.5 billion. This includes $5.8 billion of cash and investments, implying a value net of cash of $31.7 billion. The company should generate an additional $1.25 billion of free cash flow in the second half of the year, receive $2.0 billion in net cash proceeds from ADE, and shares in ADE worth another $9.0 billion at current prices. Backing out these additional items results in a clean market cap of $19.5 million for EBAY’s core marketplace.

By 2022, EBAY’s managed payments initiative should more or less offset the cash flow the company will lose as a result of the sale of the classifieds portfolio. Steady state free cash flow should remain in the realm of $2.0 billion. To this end, I believe we are paying an effective 10x P/FCF multiple for the core marketplace business. Say what you want about EBAY, but this is hardly a demanding valuation for a capital-light (a positive in an inflationary world) ecommerce operator (a positive in a pandemic-stricken world).”

In Q2 2020, the number of bullish hedge fund positions on eBay Inc (NASDAQ:EBAY) stock increased by about 12% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in eBay’s growth potential. Our calculations showed that eBay Inc (NASDAQ:EBAY) isn’t ranked among the 30 most popular stocks among hedge funds.

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Why EchoStar Corp (SATS) Stock is a Compelling Investment Case

Wed, 28 Oct 2020 15:51:53 GMT

In the said letter, Steel City Capital highlighted a few stocks and EchoStar Corp (NASDAQ:SATS) is one of them. EchoStar Corp (NASDAQ:SATS) is a provider of satellite communication and Internet services. Year-to-date, EchoStar Corp (NASDAQ:SATS) stock lost 44% and on October 27th it had a closing price of $24.27. Here is what Steel City Capital said:

“EchoStar (Long): While the Partnership’s investment in EchoStar (SATS) is not new, it has not previously been discussed in any detail. The company’s business is very simple – it derives the vast majority of its revenue from the sale of satellite-based broadband internet services to consumers and enterprises across the Americas. As of 6/30/2020, SATS had 1.5 million subscribers, of which 1.2 million are located in the U.S. To a lesser extent, the company generates revenue from the sale of equipment to government and commercial customers.

The average consumer is unlikely to be familiar with SATS offering. While more than 100 million U.S. households have broadband internet access, EchoStar and its main competitor, ViaSat, only serve a combined 1.8 million subscribers. Most American households rely on terrestrial service from cable or fiber. The small minority of households that rely on satellite connectivity do so because it is too costly to run a terrestrial line to their location. These households tend to be located in geographies with very limited population density. Specifically, more than half of SATS consumer subscribers are located in areas with five or fewer houses per square kilometer. In areas like this, it just doesn’t make sense for the local cable company to run a line to the house – they’ll never earn an adequate return on their investment.

SATS is currently valued at ~3.5x EV/EBITDA (MRQ annualized) and has reasonable growth prospects ahead of it. Specifically, the company will launch its Jupiter 3 satellite in the second half of 2021, resulting in a combination of additional subscribers and the availability of higher speed and capacity for existing customers. The new satellite should begin contributing to profitability sometime in 2022. In addition to its core satellite business, the company owns a grab bag of other assets whose value could be monetized in the future. The most interesting are the S-Band spectrum licenses being used to develop new commercial service offerings (i.e. Internet of Things).

At 3.5x EV/EBITDA, SATS valuation is an outlier in the satellite communication industry. Its closest North American peer – ViaSat – currently trades at 8.0x EV/EBITDA, consistent with its historical premium. The reasons for this premium confound me – SATS is the clear leader in North America (1.2 million subs vs. 600,000 subs) and has far less exposure to the in-flight connectivity business which has been battered by the pandemic. As another point of reference, a consortium of private equity investors acquired European-based Inmarsat in 2019 at an implied EV/EBITDA multiple of ~9.0x.

SATS is also an outlier with respect to the strength of its balance sheet. The company carries no net debt, with its $2.4 billion cash balance completely offsetting outstanding borrowings. Comparatively, ViaSat’s net leverage sits around 3.75x. It is utterly insane that EchoStar’s lower quality competitor carries leverage at a level fully in excess of EchoStar’s total valuation.

In the absence of accretive investment opportunities, the company could simply repay debt, reducing its interest burden by $160 million annually. With current run-rate EBITDA of $660 million and maintenance capital expenditures in the realm of $400 million, SATS is poised to generate in excess of $250 million of annual cash flow if it does nothing else but repay its outstanding debt. And as a reminder, EBITDA should begin to grow in 2022, following the launch of the Jupiter 3 satellite. At today’s market capitalization of ~$2.4 billion, SATS offers a compelling free cash flow yield slightly in excess of 10%. Considering the company’s leading market position in an effective duopoly, high barriers to entry in the markets it serves (low density rural areas), good prospects for growth, and recurring revenue streams, SATS is a compelling bargain in today’s low interest rate world.

The most prominent area of pushback that I run into with SATS is the competitive threat from Low Earth Orbit (LEO) satellites. It’s a hard topic to address with brevity or certainty, but I’ll highlight some of my thoughts. There’s a long list of hurdles that LEOs must overcome before establishing their operational and financial viability. For example, there doesn’t yet exist economically viable antenna technology that would support widespread residential adoption. Second, only a small portion of the nameplate capacity of a LEO system will be saleable, which should support the competitiveness of next generation geosynchronous (GEO) satellites. In order to maximize saleable capacity, LEO operators will need to target customers outside of rural communities (EchoStar’s bread and butter). Competing with the terrestrial networks that serve more densely populated areas won’t be easy. And then there is the issue of building necessary ground infrastructure. In total, such an endeavor will take billions of dollars over a multi-year period. None of this is to say it can’t be done. Two of the leading projects are being spearheaded by the world’s best known and most deep-pocketed entrepreneurs: Starlink (SpaceX/Elon Musk) and Project Kuiper (Amazon/Jeff Bezos). But I do believe reports of the pending death of GEO satellites are greatly exaggerated.”

In Q2 2020, the number of bullish hedge fund positions on EchoStar Corp (NASDAQ:SATS) stock increased by about 21% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in EchoStar’s growth potential. Our calculations showed that EchoStar Corp (NASDAQ:SATS) isn’t ranked among the 30 most popular stocks among hedge funds.

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5 Highest Paying Part-Time Jobs for College Students

Wed, 28 Oct 2020 15:02:58 GMT

Below you can find the list of 5 Highest Paying Part-Time Jobs for College Students. For a detailed coverage of this topic and a more comprehensive list, please see the 12 Highest Paying Part-Time Jobs for College Students

5. Housekeeping Staff

Hourly median wage: $11.95

Hotels, hospitals and other established might look to employ staff in the housekeeping section that require little training. These generally includes easy tasks like making beds, vacuuming and arranging things.

Dima Sidelnikov/Shutterstock.com

4. Retail salespersons

Hourly median wage: $12.14

Got good etiquettes? A job in retail sales is quite lucrative and a high-paying job for college students to undertake. Good customer handling skills is a must and if you are considering a career in sales, this is a good place to start.

Karramba Production/Shutterstock.com

12 Highest Paying Part-Time Jobs for College Students

Wed, 28 Oct 2020 14:57:42 GMT

In this article we take a look at the 12 Highest Paying Part-Time Jobs for College Students. Click to skip ahead and jump to the 5 Highest Paying Part-Time Jobs for College Students.

Self-reliant college goers, here are the highest paying part-time jobs for college students that you might consider taking up. If you’re on the verge of sending out application these are the absolute musts you should try your hand at. College expenses can be sky high these days, and even with the tuition and room expenses being paid for by the parents, students find themselves in need of some cash to get by. Each frat party and Prom event can prove to be bank breaking. And even the best of them who try to refrain themselves from all the revelry and save up, even library expenses and gym contribution can add up to quite a fortune.

Students haven’t been entirely safe from the impacts of COVID-19, and like different strata of population, college goers are also bearing the brunt. In a recent study by National Bureau of Economic Research it has been observed that 13% of undergraduate students are awaiting their results due to delayed graduation. In a group of 1500 interviewed for the purpose of the research, 40% are suffering from internship or job loss, or delayed offers. That’s a significant number of students who have been adversely affected by the pandemic. Lower-income students have been more vulnerable to delayed graduation, whereas working students in general have suffered from decreased wages or pay cuts. 37% students have experienced a drop in weekly hours worked.

Even with the situations being grim, there is still scope to take up a well-paying part time job to cover expenses and counter the effects of job loss or prolonged graduation times. To ensure effective results, students need to target jobs in the high median hourly wage category and a part-time job that pays well and suits perfectly with your college schedule.

oneinchpunch/Shutterstock.com

Apart from covering up expenses and part time jobs are also a great option to build experience and confidence. Some jobs might even provide you with good leadership and managerial skills that can be used to level up on your resume. If not any part time job can educate you skills like time management and taking ownership and responsibility of your assignments. To arrive at our list we have used data from the U.S Bureau of Labor Statistics. We have based our findings on jobs the highest paying jobs that require no degree or formal education and can be undertaken with short term training, considering that for a part-timer investing considerable amount of time on training might not be feasible. We have also limited our findings to the jobs that are most opted by the under 20 age group. This way we have arrived at our list of highest paying part-time jobs for college students. However, in this category of occupations we have also limited our rankings to the occupations that are suitable for student lifestyle and are opted by a higher percentage of teens than total workers undertaking the said occupation. For example, Construction work would still fall in the high paying category, but definitely not something that college student would be preferring considering their schedules.

If you still think that a part-time job might hamper your study time and clash with you class timings, you can consider checking out The 8 Best Summer Jobs for College Students. Summer break might just be the perfect time for you to earn your pocket money and save it for a rainy day during the school year! To find better perspective, self-help books can be of great help and one can try some easy to read books about summer jobs. The Summer Jobs For Students (Job Search) (Volume 3) is highly recommended.

Most jobs that college students consider taking up would pay a wage over the minimum hourly wage. But, when you are looking at the highest paying part-time jobs for college students, they are generally on the higher end of that spectrum, but might even exceed that to an astonishing $15 per hour in some cases. The trick is to find one that suits your abilities and schedule with a good pay package as well. And, a few extra options could be considered as a back-up when sending in the applications because of course when the pay is this good the competition is likely to be high too!

So whether you are a freshman or a senior, the best job options for college goers are right here!

12. Waiters and waitresses

Hourly median wage: $11

To start out we have the fairly simple and quite popular choice amongst college students – waiting! One can easily look for jobs in waiting tables and serving as their are lots of restaurants always on the lookout and prefer part time students. Students can also start by looking around the college campus areas or even in in-house cafeterias.

wavebreakmedia/Shutterstock.com

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Was The Smart Money Right About Yum! Brands, Inc. (YUM)?

How have hedgies been trading Yum! Brands, Inc. (NYSE:YUM)?

Were Hedge Funds Right About Crowding Into Deckers Outdoor Corp (DECK)?

What have hedge funds been doing with Deckers Outdoor Corp (NYSE:DECK)?

If You Own Ollie’s Bargain Outlet (OLLI) Stock, Should You Sell It Now?

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If You Own Hanesbrands (HBI) Stock, Should You Sell It Now?

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If You Own Trupanion (TRUP) Stock, Should You Sell It Now?

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Why TC Pipelines (TCP) Stock is a Compelling Investment Case

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Is eBay Inc (EBAY) a Smart Long-term Buy?

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Why EchoStar Corp (SATS) Stock is a Compelling Investment Case

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5 Highest Paying Part-Time Jobs for College Students

5. Housekeeping Staff

Hourly median wage: $11.95

4. Retail salespersons

Hourly median wage: $12.14

12 Highest Paying Part-Time Jobs for College Students

12. Waiters and waitresses

Hourly median wage: $11