We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Fortive Corporation (NYSE:FTV) based on that data.
Is Fortive Corporation (NYSE:FTV) worth your attention right now? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions dropped by 8 in recent months. Our calculations also showed that FTV 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). FTV was in 35 hedge funds' portfolios at the end of March. There were 43 hedge funds in our database with FTV holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26082" align="aligncenter" width="400"] Andreas Halvorsen of Viking Global[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. Now we're going to review the fresh hedge fund action encompassing Fortive Corporation (NYSE:FTV).
What have hedge funds been doing with Fortive Corporation (NYSE:FTV)?
Heading into the second quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FTV over the last 18 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, Viking Global was the largest shareholder of Fortive Corporation (NYSE:FTV), with a stake worth $519.7 million reported as of the end of September. Trailing Viking Global was Citadel Investment Group, which amassed a stake valued at $97.5 million. Adage Capital Management, D E Shaw, and Select Equity Group 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 Appian Way Asset Management allocated the biggest weight to Fortive Corporation (NYSE:FTV), around 5.37% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, earmarking 3.48 percent of its 13F equity portfolio to FTV.
Judging by the fact that Fortive Corporation (NYSE:FTV) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies who sold off their entire stakes heading into Q4. Intriguingly, Jeffrey Gates's Gates Capital Management cut the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $81.1 million in stock, and Ian Simm's Impax Asset Management was right behind this move, as the fund cut about $24 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 8 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Fortive Corporation (NYSE:FTV). We will take a look at Cadence Design Systems Inc (NASDAQ:CDNS), Valero Energy Corporation (NYSE:VLO), RingCentral Inc (NYSE:RNG), and Southwest Airlines Co. (NYSE:LUV). All of these stocks' market caps resemble FTV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDNS,31,1339958,-11 VLO,45,275743,-1 RNG,67,2827940,5 LUV,45,2344803,1 Average,47,1697111,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $1697 million. That figure was $1015 million in FTV's case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Cadence Design Systems Inc (NASDAQ:CDNS) is the least popular one with only 31 bullish hedge fund positions. Fortive Corporation (NYSE:FTV) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately FTV wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FTV investors were disappointed as the stock returned 10.6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.