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Is AMETEK, Inc. (AME) A Good Stock To Buy?

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The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards AMETEK, Inc. (NYSE:AME).

Is AME a good stock to buy? The best stock pickers were becoming more confident. The number of bullish hedge fund positions improved by 1 lately. AMETEK, Inc. (NYSE:AME) was in 32 hedge funds' portfolios at the end of March. The all time high for this statistic is 40. Our calculations also showed that AME isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

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. Now let's review the key hedge fund action encompassing AMETEK, Inc. (NYSE:AME).

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

At the end of the first quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AME over the last 23 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in AMETEK, Inc. (NYSE:AME), which was worth $207.7 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $143.4 million worth of shares. GAMCO Investors, Giverny Capital, and AQR Capital 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 Giverny Capital allocated the biggest weight to AMETEK, Inc. (NYSE:AME), around 6.13% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, earmarking 1.74 percent of its 13F equity portfolio to AME.

As aggregate interest increased, key hedge funds were leading the bulls' herd. Renaissance Technologies, created the largest position in AMETEK, Inc. (NYSE:AME). Renaissance Technologies had $20.6 million invested in the company at the end of the quarter. Gregg Moskowitz's Interval Partners also initiated a $11 million position during the quarter. The other funds with brand new AME positions are Brandon Haley's Holocene Advisors, Anand Parekh's Alyeska Investment Group, and Paul Tudor Jones's Tudor Investment Corp.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as AMETEK, Inc. (NYSE:AME) but similarly valued. These stocks are ANSYS, Inc. (NASDAQ:ANSS), Otis Worldwide Corporation (NYSE:OTIS), Valero Energy Corporation (NYSE:VLO), Liberty Broadband Corp (NASDAQ:LBRDA), Liberty Broadband Corp (NASDAQ:LBRDK), Discover Financial Services (NYSE:DFS), and First Republic Bank (NYSE:FRC). All of these stocks' market caps are similar to AME's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANSS,33,1503462,-7 OTIS,52,2750826,-7 VLO,41,462502,3 LBRDA,23,774868,-3 LBRDK,70,6857308,-10 DFS,45,654294,2 FRC,41,1262066,7 Average,43.6,2037904,-2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.6 hedge funds with bullish positions and the average amount invested in these stocks was $2038 million. That figure was $910 million in AME's case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 23 bullish hedge fund positions. AMETEK, Inc. (NYSE:AME) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AME is 39.6. 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 negative signal and 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 surpassed the market again by 6 percentage points. Unfortunately AME wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AME investors were disappointed as the stock returned 5.8% 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 most of these stocks already outperformed the market in 2021.

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