We at Insider Monkey have gone over 738 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 March 31st. In this article, we look at what those funds think of Texas Instruments Incorporated (NASDAQ:TXN) based on that data.
Is Texas Instruments Incorporated (NASDAQ:TXN) a bargain? The best stock pickers are getting less bullish. The number of bullish hedge fund bets dropped by 1 recently. Our calculations also showed that TXN isn't among the 30 most popular stocks among hedge funds.
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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the fresh hedge fund action surrounding Texas Instruments Incorporated (NASDAQ:TXN).
What have hedge funds been doing with Texas Instruments Incorporated (NASDAQ:TXN)?
Heading into the second quarter of 2019, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. By comparison, 41 hedge funds held shares or bullish call options in TXN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Texas Instruments Incorporated (NASDAQ:TXN) was held by Generation Investment Management, which reported holding $612.6 million worth of stock at the end of March. It was followed by AQR Capital Management with a $347.9 million position. Other investors bullish on the company included Diamond Hill Capital, Lansdowne Partners, and Adage Capital Management.
Since Texas Instruments Incorporated (NASDAQ:TXN) has faced a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who were dropping their positions entirely in the third quarter. Intriguingly, John Hurley's Cavalry Asset Management dumped the largest stake of all the hedgies watched by Insider Monkey, worth about $36.8 million in stock, and Boaz Weinstein's Saba Capital was right behind this move, as the fund dropped about $28.4 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Texas Instruments Incorporated (NASDAQ:TXN) but similarly valued. These stocks are Diageo plc (NYSE:DEO), China Petroleum & Chemical Corp (NYSE:SNP), United Parcel Service, Inc. (NYSE:UPS), and Linde plc (NYSE:LIN). All of these stocks' market caps match TXN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DEO,16,861675,2 SNP,13,250613,-2 UPS,37,1006858,5 LIN,37,1629340,0 Average,25.75,937122,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $937 million. That figure was $2309 million in TXN's case. United Parcel Service, Inc. (NYSE:UPS) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Texas Instruments Incorporated (NASDAQ:TXN) is more popular among hedge funds. 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. Hedge funds were also right about betting on TXN, though not to the same extent, as the stock returned 0.1% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.