At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Resideo Technologies, Inc. (NYSE:REZI) makes for a good investment right now.
Is Resideo Technologies, Inc. (NYSE:REZI) a sound investment right now? Money managers were in a bullish mood. The number of bullish hedge fund bets inched up by 1 in recent months. Resideo Technologies, Inc. (NYSE:REZI) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that REZI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 27 hedge funds in our database with REZI positions at the end of the first quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a glance at the latest hedge fund action surrounding Resideo Technologies, Inc. (NYSE:REZI).
Do Hedge Funds Think REZI Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REZI over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Resideo Technologies, Inc. (NYSE:REZI) was held by Praesidium Investment Management Company, which reported holding $224.1 million worth of stock at the end of June. It was followed by Iridian Asset Management with a $109.1 million position. Other investors bullish on the company included Freshford Capital Management, Ophir Asset Management, and Greenlight Capital. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Resideo Technologies, Inc. (NYSE:REZI), around 11.95% of its 13F portfolio. Freshford Capital Management is also relatively very bullish on the stock, designating 8.28 percent of its 13F equity portfolio to REZI.
As industrywide interest jumped, some big names have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, initiated the most outsized position in Resideo Technologies, Inc. (NYSE:REZI). ExodusPoint Capital had $0.8 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new REZI investors: Peter Muller’s PDT Partners, Benjamin A. Smith’s Laurion Capital Management, and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Resideo Technologies, Inc. (NYSE:REZI) but similarly valued. We will take a look at Wintrust Financial Corporation (NASDAQ:WTFC), Healthcare Realty Trust Inc (NYSE:HR), New Relic Inc (NYSE:NEWR), frontdoor, inc. (NASDAQ:FTDR), Lions Gate Entertainment Corporation (NYSE:LGF-B), H&R Block, Inc. (NYSE:HRB), and Adient plc (NYSE:ADNT). All of these stocks’ market caps match REZI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTFC | 18 | 222826 | -1 |
| HR | 19 | 186785 | -1 |
| NEWR | 29 | 1281799 | 2 |
| FTDR | 33 | 686925 | -3 |
| LGF-B | 22 | 518626 | -5 |
| HRB | 30 | 229563 | 3 |
| ADNT | 35 | 662444 | -4 |
| Average | 26.6 | 541281 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $541 million. That figure was $683 million in REZI’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Wintrust Financial Corporation (NASDAQ:WTFC) is the least popular one with only 18 bullish hedge fund positions. Resideo Technologies, Inc. (NYSE:REZI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REZI is 59.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately REZI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on REZI were disappointed as the stock returned -16.1% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Resideo Technologies Inc. (NYSE:REZI)
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Disclosure: None. This article was originally published at Insider Monkey.
