Is Intuit Inc. (NASDAQ:INTU) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Intuit Inc. (NASDAQ:INTU) has experienced an increase in enthusiasm from smart money of late. INTU was in 46 hedge funds' portfolios at the end of June. There were 42 hedge funds in our database with INTU positions at the end of the previous quarter. Our calculations also showed that INTU isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's view the latest hedge fund action encompassing Intuit Inc. (NASDAQ:INTU).
How have hedgies been trading Intuit Inc. (NASDAQ:INTU)?
At Q2's end, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards INTU over the last 16 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Intuit Inc. (NASDAQ:INTU) was held by AQR Capital Management, which reported holding $664.7 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $439.6 million position. Other investors bullish on the company included Coatue Management, GLG Partners, and Marshall Wace LLP.
Now, specific money managers have been driving this bullishness. Chilton Investment Company, managed by Richard Chilton, created the most outsized position in Intuit Inc. (NASDAQ:INTU). Chilton Investment Company had $53.3 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also made a $46.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Michael Kharitonov and Jon David McAuliffe's Voleon Capital, and Matthew Tewksbury's Stevens Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). We will take a look at Becton, Dickinson and Company (NYSE:BDX), Vale SA (NYSE:VALE), Canadian National Railway Company (NYSE:CNI), and Chubb Limited (NYSE:CB). This group of stocks' market valuations are similar to INTU's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BDX,40,1254476,5 VALE,21,1848374,-1 CNI,28,2303561,11 CB,25,501768,2 Average,28.5,1477045,4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1477 million. That figure was $2203 million in INTU's case. Becton, Dickinson and Company (NYSE:BDX) is the most popular stock in this table. On the other hand Vale SA (NYSE:VALE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Intuit Inc. (NASDAQ:INTU) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on INTU, though not to the same extent, as the stock returned 1.9% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.