Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) based on that data and determine whether they were really smart about the stock.
Is Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) the right investment to pursue these days? Investors who are in the know were in a bullish mood. The number of long hedge fund positions moved up by 4 lately. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) was in 58 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 63. Our calculations also showed that TSM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 54 hedge funds in our database with TSM holdings at the end of March. Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are dozens of formulas stock market investors employ to assess their stock investments. A couple of the most useful formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a very impressive margin (see the details here).
Andrew Sandler of Sandler Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s review the recent hedge fund action encompassing Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM).
How are hedge funds trading Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)?
At the end of June, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TSM over the last 20 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.
Among these funds, Fisher Asset Management held the most valuable stake in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), which was worth $1674.7 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $616.4 million worth of shares. AQR Capital Management, GLG Partners, and Driehaus Capital 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 Keywise Capital Management allocated the biggest weight to Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), around 9.42% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, dishing out 5.81 percent of its 13F equity portfolio to TSM.
Consequently, specific money managers have been driving this bullishness. Hillhouse Capital Management, managed by Lei Zhang, established the most outsized position in Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). Hillhouse Capital Management had $62.5 million invested in the company at the end of the quarter. Daniel Sundheim’s D1 Capital Partners also made a $35.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Chen Tianqiao’s Shanda Asset Management, Israel Englander’s Millennium Management, and Andrew Sandler’s Sandler Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) but similarly valued. These stocks are JPMorgan Chase & Co. (NYSE: JPM), UnitedHealth Group Inc. (NYSE: UNH), The Home Depot, Inc. (NYSE: HD), Intel Corporation (NASDAQ: INTC), NVIDIA Corporation (NASDAQ: NVDA), Verizon Communications Inc. (NYSE: VZ), and AT&T Inc. (NYSE: T). All of these stocks’ market caps are similar to TSM’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JPM,123,8732467,11 UNH,96,8326373,-8 HD,85,4642557,-2 INTC,78,6480425,5 NVDA,92,5548398,-3 VZ,68,2973925,0 T,57,1659928,0 Average,85.6,5480582,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 85.6 hedge funds with bullish positions and the average amount invested in these stocks was $5481 million. That figure was $5210 million in TSM’s case. JPMorgan Chase & Co. (NYSE: JPM) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE: T) is the least popular one with only 57 bullish hedge fund positions. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TSM is 37.4. 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. 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 gained 28.2% in 2020 through August 24th and still beat the market by 20.6 percentage points. A small number of hedge funds were also right about betting on TSM as the stock returned 39% since the end of June and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.