Hedge Funds Are Cashing Out Of Intuit Inc. (INTU)

In this article you are going to find out whether hedge funds think Intuit Inc. (NASDAQ:INTU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Intuit Inc. (NASDAQ:INTU) has experienced a decrease in activity from the world’s largest hedge funds lately. Intuit Inc. (NASDAQ:INTU) was in 66 hedge funds’ portfolios at the end of June. 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 Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ricky Sandler of Eminence Capital

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 we’re going to check out the recent hedge fund action regarding Intuit Inc. (NASDAQ:INTU).

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

At the end of the second quarter, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in INTU over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fundsmith LLP held the most valuable stake in Intuit Inc. (NASDAQ:INTU), which was worth $2246.4 million at the end of the second quarter. On the second spot was Third Point which amassed $539.2 million worth of shares. Foxhaven Asset Management, AQR Capital Management, and Echo Street Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Foxhaven Asset Management allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 7.25% of its 13F portfolio. Blue Whale Capital is also relatively very bullish on the stock, setting aside 6.94 percent of its 13F equity portfolio to INTU.

Seeing as Intuit Inc. (NASDAQ:INTU) has experienced a decline in interest from hedge fund managers, we can see that there exists a select few money managers who sold off their full holdings by the end of the second quarter. It’s worth mentioning that Daniel S. Och’s OZ Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, worth an estimated $66.7 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund cut about $35.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s now review 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 BlackRock, Inc. (NYSE:BLK), American Express Company (NYSE:AXP), Starbucks Corporation (NASDAQ:SBUX), Sanofi (NYSE:SNY), International Business Machines Corp. (NYSE:IBM), Applied Materials, Inc. (NASDAQ:AMAT), and Raytheon Technologies Corp (NYSE:RTX). This group of stocks’ market caps match INTU’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.3 hedge funds with bullish positions and the average amount invested in these stocks was $6292 million. That figure was $5383 million in INTU’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Sanofi (NYSE:SNY) 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 76. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on INTU as the stock returned 15.8% since the end of Q2 (through 9/27) 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.

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