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Hedge Funds Aren’t Done Buying Teledyne Technologies Incorporated (TDY)

Abigail Fisher

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Teledyne Technologies Incorporated (NYSE:TDY), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Teledyne Technologies Incorporated (NYSE:TDY) has seen an increase in enthusiasm from smart money of late. TDY was in 29 hedge funds' portfolios at the end of the third quarter of 2019. There were 26 hedge funds in our database with TDY positions at the end of the previous quarter. Our calculations also showed that TDY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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 Russell 2000 ETFs by 40 percentage points since May 2014 (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_670485" align="aligncenter" width="473"] Michael Platt of BlueCrest Capital Mgmt.[/caption]

Michael Platt BlueCrest Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a glance at the latest hedge fund action encompassing Teledyne Technologies Incorporated (NYSE:TDY).

What does smart money think about Teledyne Technologies Incorporated (NYSE:TDY)?

At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in TDY a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TDY_dec2019

When looking at the institutional investors followed by Insider Monkey, Cliff Asness's AQR Capital Management has the number one position in Teledyne Technologies Incorporated (NYSE:TDY), worth close to $208.9 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Cardinal Capital, led by Amy Minella, holding a $111.9 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Ken Fisher's Fisher Asset Management, Alexander Mitchell's Scopus Asset Management and Steven Richman's RR Partners. In terms of the portfolio weights assigned to each position RR Partners allocated the biggest weight to Teledyne Technologies Incorporated (NYSE:TDY), around 5.59% of its portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 3.7 percent of its 13F equity portfolio to TDY.

As industrywide interest jumped, key money managers were leading the bulls' herd. G2 Investment Partners Management, managed by Josh Goldberg, initiated the biggest position in Teledyne Technologies Incorporated (NYSE:TDY). G2 Investment Partners Management had $9.4 million invested in the company at the end of the quarter. David E. Shaw's D E Shaw also made a $4.4 million investment in the stock during the quarter. The other funds with brand new TDY positions are Matthew Tewksbury's Stevens Capital Management, Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..

Let's check out hedge fund activity in other stocks similar to Teledyne Technologies Incorporated (NYSE:TDY). We will take a look at EXACT Sciences Corporation (NASDAQ:EXAS), Wynn Resorts, Limited (NASDAQ:WYNN), Regency Centers Corp (NASDAQ:REG), and Cenovus Energy Inc (NYSE:CVE). This group of stocks' market values resemble TDY's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXAS,35,586487,3 WYNN,36,1171401,-3 REG,16,233615,4 CVE,25,635156,8 Average,28,656665,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $657 million. That figure was $686 million in TDY's case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Regency Centers Corp (NASDAQ:REG) is the least popular one with only 16 bullish hedge fund positions. Teledyne Technologies Incorporated (NYSE:TDY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on TDY, though not to the same extent, as the stock returned 6.2% during the first two months of the fourth quarter and outperformed the market as well.

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

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