Debasis Saha
·6 min read
With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was QuantumScape Corporation (NYSE:QS).
Is QS a good stock to buy? Prominent investors were getting less bullish. The number of bullish hedge fund positions shrunk by 6 recently. QuantumScape Corporation (NYSE:QS) was in 29 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that QS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 35 hedge funds in our database with QS holdings at the end of December.
If you'd ask most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are greater than 8000 funds in operation at the moment, Our experts hone in on the masters of this club, around 850 funds. These money managers command the majority of the hedge fund industry's total asset base, and by tailing their matchless investments, Insider Monkey has identified various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to take a gander at the latest hedge fund action surrounding QuantumScape Corporation (NYSE:QS).
Do Hedge Funds Think QS Is A Good Stock To Buy Now?
At the end of March, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in QS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Soros Fund Management held the most valuable stake in QuantumScape Corporation (NYSE:QS), which was worth $148.3 million at the end of the fourth quarter. On the second spot was JS Capital which amassed $148.3 million worth of shares. Millennium Management, Islet Management, and Coatue 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 JS Capital allocated the biggest weight to QuantumScape Corporation (NYSE:QS), around 7.67% of its 13F portfolio. Soros Fund Management is also relatively very bullish on the stock, setting aside 2.78 percent of its 13F equity portfolio to QS.
Because QuantumScape Corporation (NYSE:QS) has faced falling interest from hedge fund managers, logic holds that there lies a certain "tier" of funds who sold off their entire stakes in the first quarter. Interestingly, Christian Leone's Luxor Capital Group dumped the largest position of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $352.2 million in stock, and Tony Davis's Inherent Group was right behind this move, as the fund said goodbye to about $104.5 million worth. These transactions are important to note, as total hedge fund interest was cut by 6 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as QuantumScape Corporation (NYSE:QS) but similarly valued. We will take a look at Sun Communities Inc (NYSE:SUI), Genuine Parts Company (NYSE:GPC), The Liberty SiriusXM Group (NASDAQ:LSXMA), Smith & Nephew plc (NYSE:SNN), Brookfield Property Partners LP (NYSE:BPY), Akamai Technologies, Inc. (NASDAQ:AKAM), and Cincinnati Financial Corporation (NASDAQ:CINF). This group of stocks' market valuations are closest to QS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SUI,35,1007911,8 GPC,26,357245,1 LSXMA,38,1727128,-4 SNN,11,42029,-1 BPY,17,205102,8 AKAM,25,206922,-8 CINF,22,886358,2 Average,24.9,633242,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $633 million. That figure was $535 million in QS's case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 11 bullish hedge fund positions. QuantumScape Corporation (NYSE:QS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QS is 57.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately QS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on QS were disappointed as the stock returned -40.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Get real-time email alerts: Follow Quantumscape Corp
Suggested Articles:
10 Small-Cap Stocks With Huge Growth Potential
10 Best Gold Stocks To Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
As an expert in finance and investment analysis, it's clear from the provided article that the focus is on hedge fund activity, particularly regarding QuantumScape Corporation (NYSE:QS). The information is derived from 13F filings, which are mandatory reports filed by institutional investment managers with at least $100 million in assets under management. These filings provide insights into their holdings, giving investors and the public a glimpse into the investment decisions made by some of the most prominent money managers.
Let's break down the key concepts used in the article:
-
13F Filings: These are quarterly reports required by the U.S. Securities and Exchange Commission (SEC) from institutional investment managers with assets under management exceeding $100 million. The filings disclose their equity holdings, including stocks, options, and convertible securities.
-
Hedge Funds: These are investment funds that pool capital from accredited individuals or institutional investors and use various strategies to earn returns for their investors. Hedge funds are known for their flexibility in investment strategies, which can include long and short positions, leverage, and derivatives.
-
QuantumScape Corporation (NYSE: QS): The article revolves around the hedge fund activity related to QuantumScape, a company listed on the New York Stock Exchange. The focus is on whether prominent investors are buying or selling the stock.
-
Bullish and Bearish Positions: "Bullish" refers to a positive outlook on a stock, anticipating its price to rise, while "bearish" is the opposite, indicating a negative outlook with an expectation of price decline.
-
Hedge Fund Sentiment Score: The article mentions an overall hedge fund sentiment score for QS, which is 57.2. This score is likely a proprietary measure that takes into account various factors, providing an overall assessment of how hedge funds feel about the stock.
-
Top Hedge Fund Holders: The article lists some of the top hedge funds holding QuantumScape stock at the end of the first quarter. It includes information about the value of their holdings and their portfolio weightings.
-
Hedge Fund Strategies: The article briefly touches upon the hedge fund industry's total asset base, suggesting that by following the investments of top funds, one can identify investment strategies that historically outperformed the broader market.
-
Comparison with Other Stocks: Towards the end of the article, there's a comparison of QuantumScape with other stocks in different industries but with similar market valuations. This includes information on the number of hedge funds holding positions and the total value of those positions.
-
Hedge Fund Performance: The article mentions the performance of Insider Monkey's flagship short hedge fund strategy and the return of their monthly newsletter's portfolio of long stock picks. These performance metrics are used to demonstrate the effectiveness of their investment strategies.
-
Market Valuation: The article compares the market valuation of QuantumScape with other stocks in the same table, providing insights into how it stands relative to its peers.
In conclusion, the article aims to provide investors with information on hedge fund activity related to QuantumScape Corporation, offering insights into whether these professional investors are optimistic or pessimistic about the stock. The inclusion of performance metrics and comparisons with other stocks adds additional layers of analysis.
