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. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Eaton Corporation plc (NYSE:ETN) and determine whether the smart money was really smart about this stock.
Is Eaton Corporation plc (NYSE:ETN) a healthy stock for your portfolio? The best stock pickers were getting more optimistic. The number of bullish hedge fund positions rose by 5 in recent months. Eaton Corporation plc (NYSE:ETN) was in 45 hedge funds’ portfolios at the end of September. The all time high for this statistic is 49. Our calculations also showed that ETN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 40 hedge funds in our database with ETN holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a look at the latest hedge fund action encompassing Eaton Corporation plc (NYSE:ETN).
Cliff Asness of AQR Capital Management
Do Hedge Funds Think ETN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ETN over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Eaton Corporation plc (NYSE:ETN) was held by Holocene Advisors, which reported holding $242.1 million worth of stock at the end of September. It was followed by Lansdowne Partners with a $183.2 million position. Other investors bullish on the company included AQR Capital Management, Millennium Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Eaton Corporation plc (NYSE:ETN), around 8.63% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, setting aside 2.92 percent of its 13F equity portfolio to ETN.
As aggregate interest increased, some big names have jumped into Eaton Corporation plc (NYSE:ETN) headfirst. TwinBeech Capital, managed by Jinghua Yan, assembled the biggest position in Eaton Corporation plc (NYSE:ETN). TwinBeech Capital had $14.9 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $9.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Javier Velazquez’s Albar Capital, and Mika Toikka’s AlphaCrest Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Eaton Corporation plc (NYSE:ETN) but similarly valued. These stocks are Norfolk Southern Corp. (NYSE:NSC), Dominion Energy Inc. (NYSE:D), America Movil SAB de CV (NYSE:AMX), NIO Inc. (NYSE:NIO), FedEx Corporation (NYSE:FDX), América Móvil, S.A.B. de C.V. (NYSE:AMOV), and Northrop Grumman Corporation (NYSE:NOC). This group of stocks’ market values match ETN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSC | 46 | 1049404 | -12 |
| D | 27 | 545194 | -7 |
| AMX | 11 | 167723 | -2 |
| NIO | 30 | 1138194 | -4 |
| FDX | 49 | 1682204 | -12 |
| AMOV | 1 | 300 | 0 |
| NOC | 29 | 910523 | -13 |
| Average | 27.6 | 784792 | -7.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $785 million. That figure was $1090 million in ETN’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand América Móvil, S.A.B. de C.V. (NYSE:AMOV) is the least popular one with only 1 bullish hedge fund positions. Eaton Corporation plc (NYSE:ETN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETN is 83.4. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on ETN as the stock returned 6.6% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Eaton Corp Plc (NYSE:ETN)
Follow Eaton Corp Plc (NYSE:ETN)
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Disclosure: None. This article was originally published at Insider Monkey.
