The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Roper Technologies Inc. (NYSE:ROP).
Is Roper Technologies Inc. (NYSE:ROP) a buy right now? Prominent investors are in a pessimistic mood. The number of bullish hedge fund bets shrunk by 2 lately. Our calculations also showed that ROP 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 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 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.
[caption id="attachment_315167" align="aligncenter" width="400"] Dan Loeb of Third Point[/caption]
At Insider Monkey 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 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. With all of this in mind we're going to take a glance at the fresh hedge fund action surrounding Roper Technologies Inc. (NYSE:ROP).
What have hedge funds been doing with Roper Technologies Inc. (NYSE:ROP)?
At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ROP 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.
The largest stake in Roper Technologies Inc. (NYSE:ROP) was held by Akre Capital Management, which reported holding $531.7 million worth of stock at the end of September. It was followed by Third Point with a $85.7 million position. Other investors bullish on the company included Alyeska Investment Group, Bristol Gate Capital Partners, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to Roper Technologies Inc. (NYSE:ROP), around 18.74% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, dishing out 6.09 percent of its 13F equity portfolio to ROP.
Since Roper Technologies Inc. (NYSE:ROP) has faced a decline in interest from hedge fund managers, it's safe to say that there is a sect of funds that decided to sell off their entire stakes last quarter. Intriguingly, Renaissance Technologies cut the largest investment of all the hedgies watched by Insider Monkey, comprising close to $34.8 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $24.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Roper Technologies Inc. (NYSE:ROP). These stocks are Sempra Energy (NYSE:SRE), Analog Devices, Inc. (NASDAQ:ADI), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and Banco Bradesco SA (NYSE:BBD). This group of stocks' market valuations resemble ROP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SRE,27,505194,-8 ADI,45,1979695,-6 SMFG,10,104520,-1 BBD,15,246087,-3 Average,24.25,708874,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $709 million. That figure was $1016 million in ROP's case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Roper Technologies Inc. (NYSE:ROP) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on ROP as the stock returned 26.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.