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Is TDY Stock A Buy or Sell?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Teledyne Technologies Incorporated (NYSE:TDY).

Is TDY stock a buy? Teledyne Technologies Incorporated (NYSE:TDY) was in 28 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. TDY investors should be aware of a decrease in hedge fund interest of late. There were 31 hedge funds in our database with TDY holdings at the end of September. Our calculations also showed that TDY isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Michael Gelband of ExodusPoint Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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. Now we're going to review the new hedge fund action encompassing Teledyne Technologies Incorporated (NYSE:TDY).

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

At fourth quarter's end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the third quarter of 2020. By comparison, 24 hedge funds held shares or bullish call options in TDY a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

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

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Teledyne Technologies Incorporated (NYSE:TDY). Fisher Asset Management has a $83.2 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is East Side Capital (RR Partners), led by Steven Richman, holding a $44.6 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Amy Minella's Cardinal Capital, Robert Joseph Caruso's Select Equity Group and Alexander Mitchell's Scopus Asset Management. In terms of the portfolio weights assigned to each position East Side Capital (RR Partners) allocated the biggest weight to Teledyne Technologies Incorporated (NYSE:TDY), around 6.57% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, setting aside 5.37 percent of its 13F equity portfolio to TDY.

Because Teledyne Technologies Incorporated (NYSE:TDY) has witnessed falling interest from the smart money, it's easy to see that there lies a certain "tier" of fund managers who sold off their positions entirely last quarter. At the top of the heap, Renaissance Technologies dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $11.4 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also cut its stock, about $2.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let's go over hedge fund activity in other stocks similar to Teledyne Technologies Incorporated (NYSE:TDY). These stocks are J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), CureVac N.V. (NASDAQ:CVAC), Masco Corporation (NYSE:MAS), Gartner Inc (NYSE:IT), Generac Holdings Inc. (NYSE:GNRC), Markel Corporation (NYSE:MKL), and Tradeweb Markets Inc. (NASDAQ:TW). This group of stocks' market values resemble TDY's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBHT,26,330836,-12 CVAC,9,23140,0 MAS,40,712440,-6 IT,37,1939657,-1 GNRC,32,559613,-11 MKL,36,941576,2 TW,31,330948,7 Average,30.1,691173,-3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $691 million. That figure was $372 million in TDY's case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand CureVac N.V. (NASDAQ:CVAC) is the least popular one with only 9 bullish hedge fund positions. Teledyne Technologies Incorporated (NYSE:TDY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TDY is 57.4. 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 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately TDY wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); TDY investors were disappointed as the stock returned 9.5% since the end of December (through 4/19) 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.

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