Does Intuit Inc. (NASDAQ:INTU) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Intuit Inc. (NASDAQ:INTU) was in 32 hedge funds’ portfolios at the end of September. INTU has seen a slight decrease in hedge fund interest recently. There were 43 hedge funds in our database with INTU holdings at the end of the previous quarter. At the end of this article we will also compare INTU to other stocks including Constellation Brands, Inc. (NYSE:STZ), ICICI Bank Limited (ADR) (NYSE:IBN), and Deere & Company (NYSE:DE) to get a better sense of its popularity.
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In today’s marketplace there are a large number of signals shareholders use to analyze publicly traded companies. A duo of the less known signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a very impressive margin (see the details here).
Now, let’s view the recent action regarding Intuit Inc. (NASDAQ:INTU).
How have hedgies been trading Intuit Inc. (NASDAQ:INTU)?
Heading into Q4, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the number one position in Intuit Inc. (NASDAQ:INTU), worth close to $140.3 million, amounting to 2% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $72.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and George Soros’ Soros Fund Management.
Seeing as Intuit Inc. (NASDAQ:INTU) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that slashed their entire stakes heading into Q4. Intriguingly, David Stemerman’s Conatus Capital Management cut the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $110.5 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $32.8 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 11 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). These stocks are Constellation Brands, Inc. (NYSE:STZ), ICICI Bank Limited (ADR) (NYSE:IBN), Deere & Company (NYSE:DE), and TE Connectivity Ltd. (NYSE:TEL). All of these stocks’ market caps match INTU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STZ | 64 | 4868413 | 2 |
| IBN | 34 | 439241 | 5 |
| DE | 35 | 2636569 | 4 |
| TEL | 28 | 1265394 | -10 |
As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $2.30 billion. That figure was $611 million in INTU’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table, while TE Connectivity Ltd. (NYSE:TEL) is the least popular one with only 28 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard STZ might be a better candidate to consider a long position.
