The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards TE Connectivity Ltd. (NYSE:TEL).
Is TEL a good stock to buy? TE Connectivity Ltd. (NYSE:TEL) was in 33 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. TEL has experienced a decrease in activity from the world's largest hedge funds recently. There were 39 hedge funds in our database with TEL holdings at the end of June. Our calculations also showed that TEL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are viewed as worthless, outdated investment tools of years past. While there are over 8000 funds trading today, Our researchers hone in on the masters of this club, around 850 funds. These money managers preside over most of the smart money's total capital, and by observing their highest performing stock picks, Insider Monkey has brought to light many investment strategies that have historically beaten the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
David Blood of Generation Investment Management
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Do Hedge Funds Think TEL Is A Good Stock To Buy Now?
At the end of September, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in TEL a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of TE Connectivity Ltd. (NYSE:TEL), with a stake worth $819.2 million reported as of the end of September. Trailing Generation Investment Management was First Pacific Advisors LLC, which amassed a stake valued at $343 million. Impax Asset Management, Third Point, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to TE Connectivity Ltd. (NYSE:TEL), around 15.73% of its 13F portfolio. Rivulet Capital is also relatively very bullish on the stock, earmarking 5.69 percent of its 13F equity portfolio to TEL.
Judging by the fact that TE Connectivity Ltd. (NYSE:TEL) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few funds who were dropping their full holdings heading into Q4. Intriguingly, Steve Cohen's Point72 Asset Management dropped the biggest position of the "upper crust" of funds tracked by Insider Monkey, valued at close to $38.9 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dumped about $30.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 6 funds heading into Q4.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as TE Connectivity Ltd. (NYSE:TEL) but similarly valued. We will take a look at SYSCO Corporation (NYSE:SYY), Cummins Inc. (NYSE:CMI), IHS Markit Ltd. (NASDAQ:INFO), Walgreens Boots Alliance Inc (NASDAQ:WBA), Agilent Technologies Inc. (NYSE:A), Datadog, Inc. (NASDAQ:DDOG), and Banco Santander, S.A. (NYSE:SAN). This group of stocks' market valuations match TEL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYY,33,2199383,-9 CMI,49,673230,11 INFO,44,1283750,0 WBA,33,285947,-12 A,39,3221001,1 DDOG,42,2604703,-15 SAN,14,232246,-2 Average,36.3,1500037,-3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1500 million. That figure was $2009 million in TEL's case. Cummins Inc. (NYSE:CMI) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 14 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. Our overall hedge fund sentiment score for TEL is 48.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on TEL as the stock returned 20.7% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.