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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Emerson Electric Co. (NYSE:EMR).
Emerson Electric Co. (NYSE:EMR) was in 45 hedge funds' portfolios at the end of March. The all time high for this statistic is 46. EMR has seen a decrease in support from the world's most elite money managers recently. There were 46 hedge funds in our database with EMR positions at the end of the fourth quarter. Our calculations also showed that EMR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most market participants, hedge funds are perceived as underperforming, old investment vehicles of the past. While there are over 8000 funds with their doors open today, Our experts choose to focus on the moguls of this group, about 850 funds. Most estimates calculate that this group of people watch over the lion's share of the smart money's total capital, and by tailing their inimitable picks, Insider Monkey has figured out numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
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Do Hedge Funds Think EMR Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in EMR a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Emerson Electric Co. (NYSE:EMR), with a stake worth $157.8 million reported as of the end of March. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $149.9 million. Millennium Management, Appaloosa Management LP, and Balyasny Asset Management 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 Albar Capital allocated the biggest weight to Emerson Electric Co. (NYSE:EMR), around 2.67% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, dishing out 2.45 percent of its 13F equity portfolio to EMR.
Seeing as Emerson Electric Co. (NYSE:EMR) has witnessed a decline in interest from the smart money, it's easy to see that there lies a certain "tier" of hedgies that slashed their positions entirely by the end of the first quarter. Intriguingly, Renaissance Technologies cut the largest stake of all the hedgies monitored by Insider Monkey, valued at close to $47.2 million in stock, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management was right behind this move, as the fund dumped about $5.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Emerson Electric Co. (NYSE:EMR). These stocks are Humana Inc (NYSE:HUM), Northrop Grumman Corporation (NYSE:NOC), Metlife Inc (NYSE:MET), Atlassian Corporation Plc (NASDAQ:TEAM), Southern Copper Corporation (NYSE:SCCO), The Blackstone Group Inc. (NYSE:BX), and Moderna, Inc. (NASDAQ:MRNA). This group of stocks' market values resemble EMR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUM,53,2878475,-6 NOC,40,1510503,0 MET,32,1147122,-5 TEAM,67,3955751,-2 SCCO,27,589771,4 BX,49,1626408,-5 MRNA,39,1640099,-2 Average,43.9,1906876,-2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.9 hedge funds with bullish positions and the average amount invested in these stocks was $1907 million. That figure was $796 million in EMR's case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Southern Copper Corporation (NYSE:SCCO) is the least popular one with only 27 bullish hedge fund positions. Emerson Electric Co. (NYSE:EMR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EMR is 55.8. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately EMR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EMR were disappointed as the stock returned 2.8% since the end of March (through 6/18) 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.