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Hedge Funds Are Done Buying General Electric Company (GE)

·5 min read

In this article we will analyze whether General Electric Company (NYSE:GE) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

General Electric Company (NYSE:GE) shareholders have witnessed a decrease in hedge fund sentiment recently. General Electric Company (NYSE:GE) was in 68 hedge funds' portfolios at the end of March. The all time high for this statistic is 74. Our calculations also showed that GE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ole Andreas Halvorsen Viking Global
Ole Andreas Halvorsen Viking Global

Ole Andreas Halvorsen of Viking Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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 go over the new hedge fund action regarding General Electric Company (NYSE:GE).

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

At Q1's end, a total of 68 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GE over the last 23 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in General Electric Company (NYSE:GE) was held by Eagle Capital Management, which reported holding $1484.2 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $1116 million position. Other investors bullish on the company included Viking Global, Trian Partners, and Adage Capital Management. In terms of the portfolio weights assigned to each position Platinum Asset Management allocated the biggest weight to General Electric Company (NYSE:GE), around 7.19% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, designating 6.63 percent of its 13F equity portfolio to GE.

Since General Electric Company (NYSE:GE) has experienced falling interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of funds that elected to cut their full holdings by the end of the first quarter. It's worth mentioning that Patrick Degorce's Theleme Partners dumped the largest investment of the 750 funds tracked by Insider Monkey, totaling close to $163.2 million in stock. Steve Cohen's fund, Point72 Asset Management, also cut its stock, about $13.9 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as General Electric Company (NYSE:GE) but similarly valued. We will take a look at BlackRock, Inc. (NYSE:BLK), American Express Company (NYSE:AXP), PetroChina Company Limited (NYSE:PTR), Airbnb, Inc. (NASDAQ:ABNB), The Goldman Sachs Group, Inc. (NYSE:GS), 3M Company (NYSE:MMM), and American Tower Corporation (REIT) (NYSE:AMT). All of these stocks' market caps are similar to GE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLK,42,1524856,-11 AXP,53,24475341,-7 PTR,8,73088,3 ABNB,52,2417824,-16 GS,77,5057213,1 MMM,41,1519815,-3 AMT,58,4593727,-3 Average,47.3,5665981,-5.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.3 hedge funds with bullish positions and the average amount invested in these stocks was $5666 million. That figure was $6166 million in GE's case. The Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 bullish hedge fund positions. General Electric Company (NYSE:GE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GE is 75. 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 positive signal but 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately GE wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GE were disappointed as the stock returned 4.3% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.

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

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