Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Allegion plc (NYSE:ALLE) in this article.
Allegion plc (NYSE:ALLE) has seen an increase in support from the world’s most elite money managers lately. Allegion plc (NYSE:ALLE) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 27 hedge funds in our database with ALLE holdings at the end of March. Our calculations also showed that ALLE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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.
David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Keeping this in mind let’s go over the key hedge fund action surrounding Allegion plc (NYSE:ALLE).
Do Hedge Funds Think ALLE Is A Good Stock To Buy Now?
At the end of June, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 37% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALLE over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Ako Capital was the largest shareholder of Allegion plc (NYSE:ALLE), with a stake worth $271.4 million reported as of the end of June. Trailing Ako Capital was Intermede Investment Partners, which amassed a stake valued at $153.4 million. Citadel Investment Group, Balyasny Asset Management, and Millennium 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 Albar Capital allocated the biggest weight to Allegion plc (NYSE:ALLE), around 14.72% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, dishing out 4.52 percent of its 13F equity portfolio to ALLE.
As industrywide interest jumped, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Allegion plc (NYSE:ALLE). Marshall Wace LLP had $15.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $10.2 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks similar to Allegion plc (NYSE:ALLE). We will take a look at Universal Health Services, Inc. (NYSE:UHS), Sociedad Química y Minera de Chile S.A. (NYSE:SQM), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Annaly Capital Management, Inc. (NYSE:NLY), Texas Pacific Land Corporation (NYSE:TPL), Cemex SAB de CV (NYSE:CX), and Cna Financial Corporation (NYSE:CNA). All of these stocks’ market caps match ALLE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UHS | 41 | 724141 | -2 |
| SQM | 19 | 156249 | 3 |
| CHRW | 31 | 299194 | 8 |
| NLY | 19 | 98211 | 4 |
| TPL | 21 | 2592325 | 4 |
| CX | 23 | 601778 | -1 |
| CNA | 13 | 65189 | -6 |
| Average | 23.9 | 648155 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $648 million. That figure was $1203 million in ALLE’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 13 bullish hedge fund positions. Allegion plc (NYSE:ALLE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALLE is 82.9. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately ALLE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALLE were disappointed as the stock returned -7.1% since the end of June (through 10/11) 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 Allegion Plc (NYSE:ALLE)
Follow Allegion Plc (NYSE:ALLE)
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Disclosure: None. This article was originally published at Insider Monkey.
