Do Hedge Funds Love Allegion PLC (ALLE)?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Allegion PLC (NYSE:ALLE), and what that likely means for the prospects of the company and its stock.

Is Allegion PLC (NYSE:ALLE) a marvelous investment today? Hedge funds are turning less bullish. The number of bullish hedge fund positions dropped by 3 recently. 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 IDEX Corporation (NYSE:IEX), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), and Agnico-Eagle Mines Limited (USA) (NYSE:AEM) to gather more data points.

In the financial world there are several metrics stock market investors employ to grade their stock investments. A duo of the most innovative metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can trounce the S&P 500 by a significant margin (see the details here).

With all of this in mind, let’s analyze the key action encompassing Allegion PLC (NYSE:ALLE).

What have hedge funds been doing with Allegion PLC (NYSE:ALLE)?

Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Blue Ridge Capital, managed by John Griffin, holds the most valuable position in Allegion PLC (NYSE:ALLE). Blue Ridge Capital has a $194 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is Select Equity Group, managed by Robert Joseph Caruso, which holds an $193.3 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital, David Gallo’s Valinor Management LLC and D. E. Shaw’s D E Shaw.

Due to the fact that Allegion PLC (NYSE:ALLE) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there is a sect of fund managers that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Joel Ramin’s 12 West Capital Management cut the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $42.3 million in stock, and Andrew Sandler’s Sandler Capital Management was right behind this move, as the fund sold off about $5.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Allegion PLC (NYSE:ALLE) but similarly valued. We will take a look at IDEX Corporation (NYSE:IEX), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Agnico-Eagle Mines Limited (USA) (NYSE:AEM), and Flowserve Corporation (NYSE:FLS). This group of stocks’ market values resemble ALLE’s market value.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $410 million. That figure was $1.17 billion in ALLE’s case. Agnico-Eagle Mines Limited (USA) (NYSE:AEM) is the most popular stock in this table with 25 long positions, while IDEX Corporation (NYSE:IEX) is the least popular one. Compared to these stocks, Allegion PLC (NYSE:ALLE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.