Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about United Technologies Corporation (NYSE:UTX) in this article.
Is United Technologies Corporation (NYSE:UTX) a cheap stock to buy now? Investors who are in the know are betting on the stock. The number of bullish hedge fund positions improved by 6 lately. Our calculations also showed that UTX 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.
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' 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. We're going to view the fresh hedge fund action surrounding United Technologies Corporation (NYSE:UTX).
How have hedgies been trading United Technologies Corporation (NYSE:UTX)?
At Q2's end, a total of 65 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UTX over the last 16 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the largest position in United Technologies Corporation (NYSE:UTX). Viking Global has a $878.1 million position in the stock, comprising 3.9% of its 13F portfolio. On Viking Global's heels is Third Point, managed by Dan Loeb, which holds a $781.2 million position; the fund has 9.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Eric W. Mandelblatt and Gaurav Kapadia's Soroban Capital Partners, Ken Griffin's Citadel Investment Group and Ken Fisher's Fisher Asset Management.
As industrywide interest jumped, some big names were leading the bulls' herd. Renaissance Technologies assembled the most valuable position in United Technologies Corporation (NYSE:UTX). Renaissance Technologies had $84 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also initiated a $52.1 million position during the quarter. The other funds with brand new UTX positions are John Overdeck and David Siegel's Two Sigma Advisors, billionaire John Paulson's Paulson & Co, and Steve Cohen's Point72 Asset Management.
Let's go over hedge fund activity in other stocks similar to United Technologies Corporation (NYSE:UTX). These stocks are Amgen, Inc. (NASDAQ:AMGN), Eli Lilly and Company (NYSE:LLY), Linde plc (NYSE:LIN), and AbbVie Inc (NYSE:ABBV). This group of stocks' market valuations are closest to UTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMGN,42,2626039,-4 LLY,43,1872480,-1 LIN,41,1865465,4 ABBV,55,4126440,8 Average,45.25,2622606,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.25 hedge funds with bullish positions and the average amount invested in these stocks was $2623 million. That figure was $6543 million in UTX's case. AbbVie Inc (NYSE:ABBV) is the most popular stock in this table. On the other hand Linde plc (NYSE:LIN) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks United Technologies Corporation (NYSE:UTX) 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 UTX as the stock returned 5.5% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.