While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Fortive Corporation (NYSE:FTV).
Fortive Corporation (NYSE:FTV) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. FTV was in 26 hedge funds' portfolios at the end of the first quarter of 2019. There were 30 hedge funds in our database with FTV holdings at the end of the previous quarter. Our calculations also showed that FTV isn't among the 30 most popular stocks among hedge funds.
To most market participants, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds trading at present, Our researchers look at the masters of this club, approximately 750 funds. These investment experts oversee most of all hedge funds' total capital, and by tracking their inimitable stock picks, Insider Monkey has formulated numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We're going to take a look at the key hedge fund action surrounding Fortive Corporation (NYSE:FTV).
How are hedge funds trading Fortive Corporation (NYSE:FTV)?
Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards FTV over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fortive Corporation (NYSE:FTV) was held by Adage Capital Management, which reported holding $145.9 million worth of stock at the end of March. It was followed by Gates Capital Management with a $65.1 million position. Other investors bullish on the company included Select Equity Group, Luminus Management, and OZ Management.
Because Fortive Corporation (NYSE:FTV) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain "tier" of fund managers that decided to sell off their positions entirely heading into Q3. It's worth mentioning that Shashin Shah's Think Investments said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, totaling close to $22.7 million in stock. Mark Kingdon's fund, Kingdon Capital, also cut its stock, about $10.7 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to Fortive Corporation (NYSE:FTV). We will take a look at TD Ameritrade Holding Corp. (NASDAQ:AMTD), Equity Residential (NYSE:EQR), AvalonBay Communities Inc (NYSE:AVB), and Advanced Micro Devices, Inc. (NASDAQ:AMD). All of these stocks' market caps are similar to FTV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMTD,30,434471,13 EQR,22,250768,-1 AVB,26,851272,-1 AMD,37,980467,9 Average,28.75,629245,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $629 million. That figure was $472 million in FTV's case. Advanced Micro Devices, Inc. (NASDAQ:AMD) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 22 bullish hedge fund positions. Fortive Corporation (NYSE:FTV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately FTV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FTV investors were disappointed as the stock returned -8.3% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.