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Was The Smart Money Right About Agilent Technologies (A)?

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Agilent Technologies Inc. (NYSE:A) in this article.

Is Agilent Technologies Inc. (NYSE:A) a buy right now? Money managers were in an optimistic mood. The number of bullish hedge fund positions moved up by 6 lately. Agilent Technologies Inc. (NYSE:A) was in 45 hedge funds' portfolios at the end of December. The all time high for this statistic is 52. Our calculations also showed that A isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 39 hedge funds in our database with A holdings at the end of September.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Bill Ackman of Pershing Square

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to check out the recent hedge fund action surrounding Agilent Technologies Inc. (NYSE:A).

Do Hedge Funds Think A Is A Good Stock To Buy Now?

At fourth quarter's end, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. By comparison, 46 hedge funds held shares or bullish call options in A a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is A A Good Stock To Buy?
Is A A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Bill Ackman's Pershing Square has the largest position in Agilent Technologies Inc. (NYSE:A), worth close to $1.4499 billion, corresponding to 14.5% of its total 13F portfolio. Coming in second is Cantillon Capital Management, led by William von Mueffling, holding a $485 million position; 3.6% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions encompass Ian Simm's Impax Asset Management, Tim Hurd and Ed Magnus's BlueSpruce Investments and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Agilent Technologies Inc. (NYSE:A), around 14.49% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, setting aside 5.57 percent of its 13F equity portfolio to A.

Consequently, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Agilent Technologies Inc. (NYSE:A). Arrowstreet Capital had $27.9 million invested in the company at the end of the quarter. Terry Smith's Fundsmith Long/Short Fund also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and Qing Li's Sciencast Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Agilent Technologies Inc. (NYSE:A) but similarly valued. We will take a look at General Mills, Inc. (NYSE:GIS), Xcel Energy Inc (NYSE:XEL), Travelers Companies Inc (NYSE:TRV), DexCom, Inc. (NASDAQ:DXCM), Aptiv PLC (NYSE:APTV), Parker-Hannifin Corporation (NYSE:PH), and Ford Motor Company (NYSE:F). This group of stocks' market valuations are closest to A's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GIS,39,952845,3 XEL,28,289526,6 TRV,34,405824,-1 DXCM,52,1664615,-6 APTV,44,1354021,6 PH,56,1601655,5 F,41,1652221,3 Average,42,1131530,2.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1132 million. That figure was $3508 million in A's case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Xcel Energy Inc (NYSE:XEL) is the least popular one with only 28 bullish hedge fund positions. Agilent Technologies Inc. (NYSE:A) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for A is 66.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on A, though not to the same extent, as the stock returned 13.1% since Q4 (through April 30th) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.

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