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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 first 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 4.5 years and analyze what the smart money thinks of Resideo Technologies, Inc. (NYSE:REZI) based on that data.
Is Resideo Technologies, Inc. (NYSE:REZI) ready to rally soon? Money managers are becoming hopeful. The number of long hedge fund bets increased by 4 recently. Our calculations also showed that REZI 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).
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
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Jeffrey Smith of Starboard Value LP[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. With all of this in mind we're going to take a look at the fresh hedge fund action encompassing Resideo Technologies, Inc. (NYSE:REZI).
Hedge fund activity in Resideo Technologies, Inc. (NYSE:REZI)
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards REZI over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Praesidium Investment Management Company held the most valuable stake in Resideo Technologies, Inc. (NYSE:REZI), which was worth $43 million at the end of the third quarter. On the second spot was Freshford Capital Management which amassed $40.8 million worth of shares. Starboard Value LP, GAMCO Investors, and Carlson 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 Freshford Capital Management allocated the biggest weight to Resideo Technologies, Inc. (NYSE:REZI), around 10.28% of its 13F portfolio. Proxima Capital Management is also relatively very bullish on the stock, designating 5.7 percent of its 13F equity portfolio to REZI.
As one would reasonably expect, specific money managers have jumped into Resideo Technologies, Inc. (NYSE:REZI) headfirst. Starboard Value LP, managed by Jeffrey Smith, created the largest position in Resideo Technologies, Inc. (NYSE:REZI). Starboard Value LP had $12.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $4.3 million position during the quarter. The other funds with new positions in the stock are Ed Bosek's BeaconLight Capital, Ken Griffin's Citadel Investment Group, and Israel Englander's Millennium Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Resideo Technologies, Inc. (NYSE:REZI) but similarly valued. These stocks are Boston Private Financial Holdings, Inc. (NASDAQ:BPFH), Seabridge Gold, Inc. (NYSE:SA), Griffon Corporation (NYSE:GFF), and China Online Education Group (NYSE:COE). This group of stocks' market values match REZI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BPFH,14,36833,-2 SA,7,28075,1 GFF,13,73402,1 COE,4,19972,1 Average,9.5,39571,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $151 million in REZI's case. Boston Private Financial Holdings, Inc. (NASDAQ:BPFH) is the most popular stock in this table. On the other hand China Online Education Group (NYSE:COE) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Resideo Technologies, Inc. (NYSE:REZI) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on REZI as the stock returned 99% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.