Hedge Funds Aren’t Crazy About The Walt Disney Company (DIS) Anymore

·6 min read

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not The Walt Disney Company (NYSE:DIS) makes for a good investment right now.

Is The Walt Disney Company (NYSE:DIS) a cheap investment right now? Hedge funds were getting less bullish. The number of bullish hedge fund positions were trimmed by 10 recently. The Walt Disney Company (NYSE:DIS) was in 134 hedge funds' portfolios at the end of March. The all time high for this statistic is 144. Our calculations also showed that DIS ranked 10th among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 144 hedge funds in our database with DIS positions at the end of the fourth quarter.

To most market participants, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers look at the moguls of this club, around 850 funds. Most estimates calculate that this group of people manage bulk of the hedge fund industry's total capital, and by watching their best investments, Insider Monkey has deciphered numerous investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated 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 .

Billionaire Dan Loeb's Top 10 Stock Picks
Billionaire Dan Loeb's Top 10 Stock Picks

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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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 let's take a gander at the new hedge fund action surrounding The Walt Disney Company (NYSE:DIS).

Do Hedge Funds Think DIS Is A Good Stock To Buy Now?

At Q1's end, a total of 134 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DIS over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of The Walt Disney Company (NYSE:DIS), with a stake worth $1908.7 million reported as of the end of March. Trailing Fisher Asset Management was Coatue Management, which amassed a stake valued at $1122.3 million. Citadel Investment Group, D E Shaw, and Third Point 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 Fosse Capital Partners allocated the biggest weight to The Walt Disney Company (NYSE:DIS), around 21.92% of its 13F portfolio. White Square Capital is also relatively very bullish on the stock, earmarking 18.66 percent of its 13F equity portfolio to DIS.

Judging by the fact that The Walt Disney Company (NYSE:DIS) has witnessed declining sentiment from the smart money, it's easy to see that there was a specific group of hedge funds that decided to sell off their entire stakes last quarter. Intriguingly, Andreas Halvorsen's Viking Global sold off the biggest investment of the 750 funds monitored by Insider Monkey, comprising about $773.9 million in stock. Josh Resnick's fund, Jericho Capital Asset Management, also sold off its stock, about $349.1 million worth. These moves are important to note, as total hedge fund interest fell by 10 funds last quarter.

Let's check out hedge fund activity in other stocks similar to The Walt Disney Company (NYSE:DIS). We will take a look at Bank of America Corporation (NYSE:BAC), The Procter & Gamble Company (NYSE:PG), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), Paypal Holdings Inc (NASDAQ:PYPL), Intel Corporation (NASDAQ:INTC), and ASML Holding N.V. (NASDAQ:ASML). All of these stocks' market caps resemble DIS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BAC,97,45321286,-2 PG,70,8539030,-13 NVDA,80,6204940,-8 HD,68,4359872,-11 PYPL,143,14717163,-4 INTC,83,7616792,11 ASML,35,3827143,5 Average,82.3,12940889,-3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 82.3 hedge funds with bullish positions and the average amount invested in these stocks was $12941 million. That figure was $12553 million in DIS's case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 35 bullish hedge fund positions. The Walt Disney Company (NYSE:DIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DIS is 93.4. 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 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately DIS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on DIS were disappointed as the stock returned -3.9% since the end of March (through 6/11) 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.

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

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