How do we determine whether Intuit Inc. (NASDAQ:INTU) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Intuit Inc. (NASDAQ:INTU) an excellent investment today? Money managers are turning bullish. The number of bullish hedge fund positions improved by 3 in recent months. Our calculations also showed that intu 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.
We're going to take a gander at the key hedge fund action regarding Intuit Inc. (NASDAQ:INTU).
Hedge fund activity in Intuit Inc. (NASDAQ:INTU)
At Q1's end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in INTU a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Intuit Inc. (NASDAQ:INTU), with a stake worth $616.1 million reported as of the end of March. Trailing AQR Capital Management was Arrowstreet Capital, which amassed a stake valued at $363.6 million. Coatue Management, Citadel Investment Group, and Whale Rock Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, initiated the most valuable position in Intuit Inc. (NASDAQ:INTU). Whale Rock Capital Management had $178.5 million invested in the company at the end of the quarter. Gabriel Plotkin's Melvin Capital Management also made a $85 million investment in the stock during the quarter. The other funds with brand new INTU positions are George Soros's Soros Fund Management, Nick Niell's Arrowgrass Capital Partners, and Ray Dalio's Bridgewater Associates.
Let's check out hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). These stocks are Ambev SA (NYSE:ABEV), Becton, Dickinson and Company (NYSE:BDX), Vale SA (NYSE:VALE), and Celgene Corporation (NASDAQ:CELG). All of these stocks' market caps match INTU's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABEV,13,247756,0 BDX,35,784594,-2 VALE,22,1943292,-11 CELG,101,11077245,43 Average,42.75,3513222,7.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $3513 million. That figure was $2352 million in INTU's case. Celgene Corporation (NASDAQ:CELG) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 13 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) 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 INTU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); INTU investors were disappointed as the stock returned -4.9% 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.