Do Hedge Funds Love Intuit Inc. (INTU)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Intuit Inc. (NASDAQ:INTU).

Is Intuit Inc. (NASDAQ:INTU) an exceptional investment now? Hedge funds were becoming less confident. The number of bullish hedge fund positions shrunk by 2 lately. Intuit Inc. (NASDAQ:INTU) was in 64 hedge funds’ portfolios at the end of September. The all time high for this statistic is 68. Our calculations also showed that INTU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 we’re going to analyze the new hedge fund action encompassing Intuit Inc. (NASDAQ:INTU).

Peter Rathjens of Arrowstreet Capital

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

At the end of the third quarter, a total of 64 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INTU over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Terry Smith’s Fundsmith LLP has the largest position in Intuit Inc. (NASDAQ:INTU), worth close to $2.4723 billion, accounting for 6.8% of its total 13F portfolio. The second largest stake is held by Dan Loeb of Third Point, with a $593.5 million position; 3.2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Pausic’s Foxhaven Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Foxhaven Asset Management allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 7.38% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, earmarking 6.91 percent of its 13F equity portfolio to INTU.

Judging by the fact that Intuit Inc. (NASDAQ:INTU) has faced declining sentiment from the smart money, we can see that there was a specific group of funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Zach Schreiber’s Point State Capital dropped the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $31.9 million in stock, and Guy Shahar’s DSAM Partners was right behind this move, as the fund said goodbye to about $21.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Intuit Inc. (NASDAQ:INTU) but similarly valued. We will take a look at Honeywell International Inc. (NASDAQ:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), Lowe’s Companies, Inc. (NYSE:LOW), Unilever PLC (NYSE:UL), and The Charles Schwab Corporation (NYSE:SCHW). This group of stocks’ market valuations are similar to INTU’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.4 hedge funds with bullish positions and the average amount invested in these stocks was $3096 million. That figure was $6152 million in INTU’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INTU is 69.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on INTU as the stock returned 21.1% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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