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Teledyne Technologies Incorporated (TDY): Hedge Funds Taking Some Chips Off The Table

Debasis Saha

In this article you are going to find out whether hedge funds think Teledyne Technologies Incorporated (NYSE:TDY) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Teledyne Technologies Incorporated (NYSE:TDY) was in 21 hedge funds' portfolios at the end of March. TDY investors should be aware of a decrease in hedge fund interest of late. There were 24 hedge funds in our database with TDY holdings at the end of the previous quarter. Our calculations also showed that TDY isn't among the 30 most popular stocks among hedge funds (click for Q1 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.

If you'd ask most stock holders, hedge funds are perceived as slow, old financial vehicles of the past. While there are more than 8000 funds with their doors open at present, We hone in on the top tier of this group, around 850 funds. Most estimates calculate that this group of people manage the lion's share of the hedge fund industry's total asset base, and by keeping track of their first-class investments, Insider Monkey has identified several investment strategies that have historically defeated the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_26388" align="aligncenter" width="400"] Lee Ainslie of Maverick Capital[/caption]

Lee Ainslie MAVERICK CAPITAL

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a gander at the recent hedge fund action regarding Teledyne Technologies Incorporated (NYSE:TDY).

What have hedge funds been doing with Teledyne Technologies Incorporated (NYSE:TDY)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in TDY a year ago. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is TDY A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Teledyne Technologies Incorporated (NYSE:TDY). AQR Capital Management has a $112.9 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, holding a $79.1 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish encompass Amy Minella's Cardinal Capital, Steven Richman's East Side Capital (RR Partners) and Robert Joseph Caruso's Select Equity Group. 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 8.96% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 2.31 percent of its 13F equity portfolio to TDY.

Since Teledyne Technologies Incorporated (NYSE:TDY) has experienced a decline in interest from hedge fund managers, it's easy to see that there exists a select few hedge funds that slashed their positions entirely by the end of the first quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the largest position of the 750 funds watched by Insider Monkey, totaling an estimated $6.1 million in stock, and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors was right behind this move, as the fund dumped about $4.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the first quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Teledyne Technologies Incorporated (NYSE:TDY) but similarly valued. These stocks are Nucor Corporation (NYSE:NUE), Baker Hughes Company (NYSE:BKR), UDR, Inc. (NYSE:UDR), and SK Telecom Co., Ltd. (NYSE:SKM). 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 NUE,26,95527,0 BKR,30,281145,-7 UDR,19,249574,-2 SKM,5,117014,-1 Average,20,185815,-2.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $385 million in TDY's case. Baker Hughes Company (NYSE:BKR) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 5 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. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately TDY wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TDY were disappointed as the stock returned 11.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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