We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Intuit Inc. (NASDAQ:INTU) based on that data.
Intuit Inc. (NASDAQ:INTU) was in 47 hedge funds' portfolios at the end of September. INTU shareholders have witnessed an increase in activity from the world's largest hedge funds recently. There were 46 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30602" align="aligncenter" width="489"] Philippe Laffont of Coatue Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a peek at the key hedge fund action encompassing Intuit Inc. (NASDAQ:INTU).
How are hedge funds trading Intuit Inc. (NASDAQ:INTU)?
At Q3's end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards INTU over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Intuit Inc. (NASDAQ:INTU), with a stake worth $542.4 million reported as of the end of September. Trailing AQR Capital Management was Arrowstreet Capital, which amassed a stake valued at $410.9 million. Two Sigma Advisors, Coatue Management, and Citadel Investment Group 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 Valley Forge Capital allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 5.62% of its portfolio. Junto Capital Management is also relatively very bullish on the stock, dishing out 2.36 percent of its 13F equity portfolio to INTU.
As aggregate interest increased, specific money managers were breaking ground themselves. Junto Capital Management, managed by James Parsons, assembled the most outsized position in Intuit Inc. (NASDAQ:INTU). Junto Capital Management had $39.7 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $21.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Brian Ashford-Russell and Tim Woolley's Polar Capital, Tor Minesuk's Mondrian Capital, and Perella Weinberg Partners.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Intuit Inc. (NASDAQ:INTU) but similarly valued. We will take a look at Westpac Banking Corporation (NYSE:WBK), Becton, Dickinson and Company (NYSE:BDX), The TJX Companies, Inc. (NYSE:TJX), and T-Mobile US, Inc. (NASDAQ:TMUS). This group of stocks' market valuations resemble INTU's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WBK,4,42624,1 BDX,44,1159555,4 TJX,48,1965386,-2 TMUS,60,1457333,-18 Average,39,1156225,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1156 million. That figure was $2011 million in INTU's case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 4 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately INTU wasn't nearly as popular as these 20 stocks and hedge funds that were betting on INTU were disappointed as the stock returned -2.1% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.