In this article we will check out the progression of hedge fund sentiment towards DISH Network Corp. (NASDAQ:DISH) 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.
DISH Network Corp. (NASDAQ:DISH) investors should pay attention to an increase in activity from the world's largest hedge funds recently. Our calculations also showed that DISH 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 44 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_25305" align="aligncenter" width="397"] John Paulson of Paulson & Co[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. Keeping this in mind let's view the fresh hedge fund action encompassing DISH Network Corp. (NASDAQ:DISH).
How have hedgies been trading DISH Network Corp. (NASDAQ:DISH)?
Heading into the second quarter of 2020, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in DISH over the last 18 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, King Street Capital was the largest shareholder of DISH Network Corp. (NASDAQ:DISH), with a stake worth $249.8 million reported as of the end of September. Trailing King Street Capital was Eagle Capital Management, which amassed a stake valued at $136 million. Paulson & Co, Key Square Capital Management, and GAMCO Investors 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 King Street Capital allocated the biggest weight to DISH Network Corp. (NASDAQ:DISH), around 27.89% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, designating 11.35 percent of its 13F equity portfolio to DISH.
As industrywide interest jumped, specific money managers were breaking ground themselves. Cavalry Asset Management, managed by John Hurley, initiated the most valuable position in DISH Network Corp. (NASDAQ:DISH). Cavalry Asset Management had $15.9 million invested in the company at the end of the quarter. Jason Mudrick's Mudrick Capital Management also initiated a $7 million position during the quarter. The following funds were also among the new DISH investors: Sander Gerber's Hudson Bay Capital Management, Greg Eisner's Engineers Gate Manager, and Nick Thakore's Diametric Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as DISH Network Corp. (NASDAQ:DISH) but similarly valued. We will take a look at POSCO (NYSE:PKX), Vipshop Holdings Limited (NYSE:VIPS), Burlington Stores Inc (NYSE:BURL), and Liberty Global plc (NASDAQ:LBTYA). This group of stocks' market valuations are similar to DISH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PKX,11,40514,1 VIPS,30,553863,3 BURL,40,937584,4 LBTYA,30,812772,3 Average,27.75,586183,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $586 million. That figure was $863 million in DISH's case. Burlington Stores Inc (NYSE:BURL) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks DISH Network Corp. (NASDAQ:DISH) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on DISH as the stock returned 47.9% so far in Q2 (through May 22nd) 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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Disclosure: None. This article was originally published at Insider Monkey.
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