In this article we will check out the progression of hedge fund sentiment towards Sony Corporation (NYSE:SNE) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Sony Corporation (NYSE:SNE) worth your attention right now? The best stock pickers are in an optimistic mood. The number of bullish hedge fund positions went up by 2 lately. Our calculations also showed that SNE isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a gander at the latest hedge fund action encompassing Sony Corporation (NYSE:SNE).
How have hedgies been trading Sony Corporation (NYSE:SNE)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SNE over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Sony Corporation (NYSE:SNE) was held by GAMCO Investors, which reported holding $175.7 million worth of stock at the end of September. It was followed by Soroban Capital Partners with a $48.2 million position. Other investors bullish on the company included LMR Partners, Third Point, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Oasis Management allocated the biggest weight to Sony Corporation (NYSE:SNE), around 19.64% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, dishing out 5.5 percent of its 13F equity portfolio to SNE.
Now, specific money managers have jumped into Sony Corporation (NYSE:SNE) headfirst. Soroban Capital Partners, managed by Eric W. Mandelblatt and Gaurav Kapadia, initiated the most valuable position in Sony Corporation (NYSE:SNE). Soroban Capital Partners had $48.2 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also made a $42.1 million investment in the stock during the quarter. The following funds were also among the new SNE investors: Seth Fischer's Oasis Management, Rob Citrone's Discovery Capital Management, and Matthew Moskey and Friedrich Schulte-Hillen's Athos Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sony Corporation (NYSE:SNE) but similarly valued. We will take a look at T-Mobile US, Inc. (NYSE:TMUS), Altria Group Inc (NYSE:MO), Mondelez International Inc (NASDAQ:MDLZ), and HDFC Bank Limited (NYSE:HDB). This group of stocks' market caps match SNE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TMUS,65,1645711,4 MO,46,1439983,-8 MDLZ,54,2218156,4 HDB,38,1852582,-1 Average,50.75,1789108,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.75 hedge funds with bullish positions and the average amount invested in these stocks was $1789 million. That figure was $461 million in SNE's case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand HDFC Bank Limited (NYSE:HDB) is the least popular one with only 38 bullish hedge fund positions. Compared to these stocks Sony Corporation (NYSE:SNE) is even less popular than HDB. Hedge funds dodged a bullet by taking a bearish stance towards SNE. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately SNE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SNE investors were disappointed as the stock returned 9.4% during the second quarter (through the end of May) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.