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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Roper Technologies Inc. (NYSE:ROP).
Is ROP stock a buy or sell? Money managers were taking a bearish view. The number of bullish hedge fund positions were cut by 10 recently. Roper Technologies Inc. (NYSE:ROP) was in 40 hedge funds' portfolios at the end of December. The all time high for this statistic is 50. Our calculations also showed that ROP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 50 hedge funds in our database with ROP holdings at the end of September.
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 124 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Charles Akre of Akre Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's go over the latest hedge fund action surrounding Roper Technologies Inc. (NYSE:ROP).
Do Hedge Funds Think ROP Is A Good Stock To Buy Now?
At the end of December, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ROP over the last 22 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Akre Capital Management, managed by Charles Akre, holds the number one position in Roper Technologies Inc. (NYSE:ROP). Akre Capital Management has a $824.7 million position in the stock, comprising 5.6% of its 13F portfolio. Sitting at the No. 2 spot is Greg Poole of Echo Street Capital Management, with a $95 million position; the fund has 1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise D. E. Shaw's D E Shaw, Peter Simmie's Bristol Gate Capital Partners and John Brennan's Sirios Capital Management. In terms of the portfolio weights assigned to each position Lansing Management allocated the biggest weight to Roper Technologies Inc. (NYSE:ROP), around 13.6% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, dishing out 6.5 percent of its 13F equity portfolio to ROP.
Due to the fact that Roper Technologies Inc. (NYSE:ROP) has faced declining sentiment from the smart money, logic holds that there was a specific group of money managers that decided to sell off their full holdings by the end of the fourth quarter. Interestingly, Renaissance Technologies dropped the largest stake of the 750 funds monitored by Insider Monkey, comprising about $68.5 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also said goodbye to its stock, about $12.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 10 funds by the end of the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Roper Technologies Inc. (NYSE:ROP) but similarly valued. These stocks are Keurig Dr Pepper Inc. (NASDAQ:KDP), The Blackstone Group Inc. (NYSE:BX), NXP Semiconductors NV (NASDAQ:NXPI), Peloton Interactive, Inc. (NASDAQ:PTON), Vodafone Group Plc (NASDAQ:VOD), Palantir Technologies Inc. (NYSE:PLTR), and Cognizant Technology Solutions Corp (NASDAQ:CTSH). This group of stocks' market values are similar to ROP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KDP,29,1076705,-12 BX,54,1450344,5 NXPI,66,2259680,-2 PTON,63,5666462,5 VOD,17,745457,-5 PLTR,38,1902514,7 CTSH,46,3517450,1 Average,44.7,2374087,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $2374 million. That figure was $1349 million in ROP's case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 17 bullish hedge fund positions. Roper Technologies Inc. (NYSE:ROP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ROP is 42.5. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately ROP wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); ROP investors were disappointed as the stock returned -8.2% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.