Is Fortive Corporation (NYSE:FTV) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Fortive Corporation (NYSE:FTV) investors should pay attention to an increase in activity from the world's largest hedge funds recently. Our calculations also showed that FTV 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.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_26082" align="aligncenter" width="466"] Andreas Halvorsen of Viking Global[/caption]
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 peek at the latest hedge fund action surrounding Fortive Corporation (NYSE:FTV).
How are hedge funds trading Fortive Corporation (NYSE:FTV)?
Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in FTV a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Fortive Corporation (NYSE:FTV) was held by Viking Global, which reported holding $331.9 million worth of stock at the end of September. It was followed by Gates Capital Management with a $86.4 million position. Other investors bullish on the company included D E Shaw, Select Equity Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Gates Capital Management allocated the biggest weight to Fortive Corporation (NYSE:FTV), around 3.75% of its portfolio. Viking Global is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to FTV.
As aggregate interest increased, some big names were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, initiated the most valuable position in Fortive Corporation (NYSE:FTV). Viking Global had $331.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace also made a $25.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, David E. Shaw's D E Shaw, and Clint Carlson's Carlson Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fortive Corporation (NYSE:FTV) but similarly valued. These stocks are Archer-Daniels-Midland Company (NYSE:ADM), PPL Corporation (NYSE:PPL), United Airlines Holdings, Inc. (NASDAQ:UAL), and Royal Caribbean Cruises Ltd. (NYSE:RCL). This group of 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 ADM,21,511939,-5 PPL,24,516405,4 UAL,46,7090686,-1 RCL,45,1672773,-1 Average,34,2447951,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $2448 million. That figure was $803 million in FTV's case. United Airlines Holdings, Inc. (NASDAQ:UAL) is the most popular stock in this table. On the other hand Archer-Daniels-Midland Company (NYSE:ADM) is the least popular one with only 21 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 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. Unfortunately FTV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FTV investors were disappointed as the stock returned 5.4% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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