Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 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' recent losses in Facebook. Let’s take a closer look at what the funds we track think about TE Connectivity Ltd. (NYSE:TEL) in this article.
Is TE Connectivity Ltd. (NYSE:TEL) going to take off soon? The smart money is in a bullish mood. The number of bullish hedge fund bets improved by 1 in recent months. Our calculations also showed that TEL isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]
We're going to analyze the new hedge fund action encompassing TE Connectivity Ltd. (NYSE:TEL).
How have hedgies been trading TE Connectivity Ltd. (NYSE:TEL)?
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2018. On the other hand, there were a total of 28 hedge funds with a bullish position in TEL at the beginning of this year. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, First Pacific Advisors LLC was the largest shareholder of TE Connectivity Ltd. (NYSE:TEL), with a stake worth $388.5 million reported as of the end of September. Trailing First Pacific Advisors LLC was AQR Capital Management, which amassed a stake valued at $173.1 million. Impax Asset Management, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, specific money managers have jumped into TE Connectivity Ltd. (NYSE:TEL) headfirst. Impax Asset Management, managed by Ian Simm, assembled the most valuable position in TE Connectivity Ltd. (NYSE:TEL). Impax Asset Management had $104 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also initiated a $38.9 million position during the quarter. The other funds with new positions in the stock are Sander Gerber's Hudson Bay Capital Management, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, and Bruce Kovner's Caxton Associates LP.
Let's check out hedge fund activity in other stocks similar to TE Connectivity Ltd. (NYSE:TEL). These stocks are Roper Technologies, Inc. (NYSE:ROP), Concho Resources Inc. (NYSE:CXO), Canadian Pacific Railway Limited (NYSE:CP), and Advanced Micro Devices, Inc. (NYSE:AMD). This group of stocks' market caps match TEL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ROP,32,861431,6 CXO,32,547181,2 CP,30,2732916,5 AMD,28,600368,1 Average,30.5,1185474,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.19 billion. That figure was $1.07 billion in TEL's case. Roper Technologies, Inc.(NYSE:ROP) is the most popular stock in this table. On the other hand Advanced Micro Devices, Inc. (NYSE:AMD) is the least popular one with only 28 bullish hedge fund positions. TE Connectivity Ltd. (NYSE:TEL) 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. In this regard ROP might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.