Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze China Mobile Limited (NYSE:CHL) from the perspective of those elite funds.
China Mobile Limited (NYSE:CHL) was in 19 hedge funds' portfolios at the end of the first quarter of 2019. CHL has seen an increase in activity from the world's largest hedge funds recently. There were 14 hedge funds in our database with CHL holdings at the end of the previous quarter. Our calculations also showed that chl isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]
Let's review the key hedge fund action encompassing China Mobile Limited (NYSE:CHL).
Hedge fund activity in China Mobile Limited (NYSE:CHL)
Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CHL over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in China Mobile Limited (NYSE:CHL) was held by Renaissance Technologies, which reported holding $266.7 million worth of stock at the end of March. It was followed by Ariel Investments with a $59.3 million position. Other investors bullish on the company included Arrowstreet Capital, PEAK6 Capital Management, and Two Sigma Advisors.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most valuable call position in China Mobile Limited (NYSE:CHL). PEAK6 Capital Management had $15 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are David Kowitz and Sheldon Kasowitz's Indus Capital, Michael Gelband's ExodusPoint Capital, and Jay Petschek and Steven Major's Corsair Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as China Mobile Limited (NYSE:CHL) but similarly valued. These stocks are The Coca-Cola Company (NYSE:KO), The Walt Disney Company (NYSE:DIS), Oracle Corporation (NYSE:ORCL), and Comcast Corporation (NASDAQ:CMCSA). This group of stocks' market valuations are closest to CHL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KO,48,20680037,-5 DIS,114,7045572,43 ORCL,52,4994743,-2 CMCSA,87,6279870,4 Average,75.25,9750056,10 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 75.25 hedge funds with bullish positions and the average amount invested in these stocks was $9750 million. That figure was $410 million in CHL's case. The Walt Disney Company (NYSE:DIS) is the most popular stock in this table. On the other hand The Coca-Cola Company (NYSE:KO) is the least popular one with only 48 bullish hedge fund positions. Compared to these stocks China Mobile Limited (NYSE:CHL) is even less popular than KO. Hedge funds dodged a bullet by taking a bearish stance towards CHL. Our calculations showed that the top 15 most popular hedge fund stocks returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CHL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CHL investors were disappointed as the stock returned -10.9% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.