Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that Trump presidency will be good for publicly traded stocks (at least in the very short term) due to lower taxes and higher GDP growth rates. Both investors profited handsomely from this analysis during the 5 hours immediately following Donald Trump’s election victory. The markets, especially small-cap stocks, kept rallying in the following three weeks. Nevertheless, there are still opportunities in individual stocks and we believe the stocks with strong hedge fund bullish stance are a good place to look for investment ideas. In this article we will find out how hedge fund sentiment to Air Products & Chemicals, Inc. (NYSE:APD) changed recently.
Air Products & Chemicals, Inc. (NYSE:APD) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 56 hedge funds’ portfolios at the end of the third quarter of 2016. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Estee Lauder Companies Inc (NYSE:EL), Boston Scientific Corporation (NYSE:BSX), and Anadarko Petroleum Corporation (NYSE:APC) to gather more data points.
Follow Air Products & Chemicals Inc. (NYSE:APD)
Follow Air Products & Chemicals Inc. (NYSE:APD)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Hedge fund activity in Air Products & Chemicals, Inc. (NYSE:APD)
At the end of the third quarter, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. On the other hand, there were a total of 55 hedge funds with a bullish position in APD at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Viking Global, led by Andreas Halvorsen, holds the biggest position in Air Products & Chemicals, Inc. (NYSE:APD). Viking Global has a $725 million position in the stock, comprising 3.1% of its 13F portfolio. On Viking Global’s heels is Pershing Square, led by Bill Ackman, which holds a $605.1 million position; 11.2% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish contain Daniel S. Och’s OZ Management, William B. Gray’s Orbis Investment Management and Phill Gross and Robert Atchinson’s Adage Capital Management. We should note that Orbis Investment Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Air Products & Chemicals, Inc. (NYSE:APD) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that elected to cut their entire stakes last quarter. It’s worth mentioning that John Griffin’s Blue Ridge Capital sold off the largest investment of the “upper crust” of funds studied by Insider Monkey, comprising close to $226.8 million in stock. Jean-Marie Eveillard’s First Eagle Investment Management, also dropped its stock, about $74.8 million worth.
Let’s also examine hedge fund activity in other stocks similar to Air Products & Chemicals, Inc. (NYSE:APD). These stocks are Estee Lauder Companies Inc (NYSE:EL), Boston Scientific Corporation (NYSE:BSX), Anadarko Petroleum Corporation (NYSE:APC), and IntercontinentalExchange Inc (NYSE:ICE). This group of stocks’ market values are closest to APD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EL | 29 | 741427 | 4 |
| BSX | 46 | 1735257 | -1 |
| APC | 65 | 3899227 | 17 |
| ICE | 47 | 2397109 | -2 |
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $2193 million. That figure was $4336 million in APD’s case. Anadarko Petroleum Corporation (NYSE:APC) is the most popular stock in this table. On the other hand Estee Lauder Companies Inc (NYSE:EL) is the least popular one with only 29 bullish hedge fund positions. Air Products & Chemicals, Inc. (NYSE:APD) 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. In this regard APC might be a better candidate to consider taking a long position in.
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Disclosure: None
