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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Aptiv PLC (NYSE:APTV)? The smart money sentiment can provide an answer to this question.
Aptiv PLC (NYSE:APTV) has seen an increase in enthusiasm from smart money lately. Aptiv PLC (NYSE:APTV) was in 50 hedge funds' portfolios at the end of March. The all time high for this statistic was 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 44 hedge funds in our database with APTV holdings at the end of December. Our calculations also showed that APTV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Bruce Kovner of Caxton Associates LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind we're going to go over the recent hedge fund action encompassing Aptiv PLC (NYSE:APTV).
Do Hedge Funds Think APTV Is A Good Stock To Buy Now?
At first quarter's end, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APTV over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Aptiv PLC (NYSE:APTV) was held by Impax Asset Management, which reported holding $402.5 million worth of stock at the end of December. It was followed by Third Point with a $213.7 million position. Other investors bullish on the company included Polar Capital, Caxton Associates LP, and Intermede Investment Partners. In terms of the portfolio weights assigned to each position Caxton Associates LP allocated the biggest weight to Aptiv PLC (NYSE:APTV), around 9.35% of its 13F portfolio. Engine No. 1 LLC is also relatively very bullish on the stock, dishing out 7.64 percent of its 13F equity portfolio to APTV.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Intermede Investment Partners, managed by Barry Dargan, assembled the largest position in Aptiv PLC (NYSE:APTV). Intermede Investment Partners had $79.5 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also made a $41.3 million investment in the stock during the quarter. The other funds with brand new APTV positions are Steve Cohen's Point72 Asset Management, Glen Kacher's Light Street Capital, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks similar to Aptiv PLC (NYSE:APTV). These stocks are Centene Corporation (NYSE:CNC), IQVIA Holdings, Inc. (NYSE:IQV), CRH PLC (NYSE:CRH), Mizuho Financial Group Inc. (NYSE:MFG), Carrier Global Corporation (NYSE:CARR), Canadian Natural Resources Limited (NYSE:CNQ), and Match Group, Inc. (NASDAQ:MTCH). This group of stocks' market values are similar to APTV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNC,53,2696678,-3 IQV,62,3683858,-7 CRH,9,165990,2 MFG,5,15835,0 CARR,51,2166831,-1 CNQ,29,528873,0 MTCH,68,2938465,-4 Average,39.6,1742361,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.6 hedge funds with bullish positions and the average amount invested in these stocks was $1742 million. That figure was $1418 million in APTV's case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. Aptiv PLC (NYSE:APTV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APTV is 75.7. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on APTV, though not to the same extent, as the stock returned 6.8% since Q1 (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.