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Hedge Funds Are Piling Into AMETEK, Inc. (AME)

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 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 AMETEK, Inc. (NYSE:AME) in this article.

Is AMETEK, Inc. (NYSE:AME) a buy here? Money managers were in an optimistic mood. The number of bullish hedge fund bets rose by 6 in recent months. AMETEK, Inc. (NYSE:AME) was in 38 hedge funds' portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that AME isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind we're going to take a look at the latest hedge fund action encompassing AMETEK, Inc. (NYSE:AME).

Do Hedge Funds Think AME Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in AME a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Ken Griffin's Citadel Investment Group has the largest position in AMETEK, Inc. (NYSE:AME), worth close to $208.2 million, amounting to less than 0.1%% of its total 13F portfolio. On Citadel Investment Group's heels is GAMCO Investors, managed by Mario Gabelli, which holds a $111 million position; 0.9% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism consist of Francois Rochon's Giverny Capital, Israel Englander's Millennium Management and Phill Gross and Robert Atchinson's Adage Capital Management. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to AMETEK, Inc. (NYSE:AME), around 6.02% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.94 percent of its 13F equity portfolio to AME.

As one would reasonably expect, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in AMETEK, Inc. (NYSE:AME). Arrowstreet Capital had $21.5 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $11.4 million position during the quarter. The other funds with brand new AME positions are Ray Dalio's Bridgewater Associates, Qing Li's Sciencast Management, and Karim Abbadi and Edward McBride's Centiva Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AMETEK, Inc. (NYSE:AME) but similarly valued. We will take a look at Unity Software Inc. (NYSE:U), MPLX LP (NYSE:MPLX), Orange SA (NYSE:ORAN), TELUS Corporation (NYSE:TU), Zillow Group Inc (NASDAQ:Z), ANSYS, Inc. (NASDAQ:ANSS), and Fomento Económico Mexicano, S.A.B. de C.V. (NYSE:FMX). This group of stocks' market values are similar to AME's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position U,29,7263688,-10 MPLX,11,115640,3 ORAN,3,13039,1 TU,13,215295,-5 Z,76,5243852,-6 ANSS,46,1459350,13 FMX,13,904303,-2 Average,27.3,2173595,-0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $2174 million. That figure was $913 million in AME's case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. AMETEK, Inc. (NYSE:AME) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AME is 62.5. 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. 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 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately AME wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AME were disappointed as the stock returned -6.6% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.