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Teledyne Technologies Incorporated (TDY): Are Hedge Funds Right About This Stock?

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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Teledyne Technologies Incorporated (NYSE:TDY)? The smart money sentiment can provide an answer to this question.

Is Teledyne Technologies Incorporated (NYSE:TDY) worth your attention right now? Hedge funds were getting more optimistic. The number of bullish hedge fund positions moved up by 3 recently. Teledyne Technologies Incorporated (NYSE:TDY) was in 31 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that TDY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are numerous formulas shareholders put to use to analyze stocks. A couple of the less known formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the S&P 500 by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

FISHER ASSET MANAGEMENT
FISHER ASSET MANAGEMENT

Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Now let's review the recent hedge fund action regarding Teledyne Technologies Incorporated (NYSE:TDY).

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

Heading into the second quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in TDY a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Among these funds, Select Equity Group held the most valuable stake in Teledyne Technologies Incorporated (NYSE:TDY), which was worth $230.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $91.6 million worth of shares. ARK Investment Management, Fisher Asset Management, and Cardinal Capital 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 Corriente Advisors allocated the biggest weight to Teledyne Technologies Incorporated (NYSE:TDY), around 8.38% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, setting aside 4.64 percent of its 13F equity portfolio to TDY.

As industrywide interest jumped, key hedge funds were breaking ground themselves. ARK Investment Management, managed by Catherine D. Wood, created the largest position in Teledyne Technologies Incorporated (NYSE:TDY). ARK Investment Management had $88.9 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also initiated a $37.9 million position during the quarter. The other funds with brand new TDY positions are Mark Hart III's Corriente Advisors, Renaissance Technologies, and Brandon Haley's Holocene Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Teledyne Technologies Incorporated (NYSE:TDY) but similarly valued. These stocks are GoodRx Holdings, Inc. (NASDAQ:GDRX), Avery Dennison Corporation (NYSE:AVY), Campbell Soup Company (NYSE:CPB), PagSeguro Digital Ltd. (NYSE:PAGS), Cenovus Energy Inc (NYSE:CVE), VICI Properties Inc. (NYSE:VICI), and GDS Holdings Limited (NASDAQ:GDS). This group of stocks' market values are similar to TDY's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GDRX,24,488114,-8 AVY,20,300350,-3 CPB,28,345398,-1 PAGS,33,1804603,8 CVE,23,379693,0 VICI,41,875487,3 GDS,40,2080333,1 Average,29.9,896283,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $896 million. That figure was $827 million in TDY's case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand Avery Dennison Corporation (NYSE:AVY) is the least popular one with only 20 bullish hedge fund positions. Teledyne Technologies Incorporated (NYSE:TDY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TDY is 61.5. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately TDY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TDY were disappointed as the stock returned 2.1% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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