Hedge Funds Are Dumping United Technologies Corporation (UTX)

The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on United Technologies Corporation (NYSE:UTX) in order to identify whether reputable and successful top money managers continue to believe in its potential.

United Technologies Corporation (NYSE:UTX) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. United Technologies Corporation (NYSE:UTX) was in 48 hedge funds’ portfolios at the end of the third quarter of 2015. There were 57 hedge funds in our database with United Technologies Corporation (NYSE:UTX) positions at the end of the previous quarter. At the end of this article, we will also compare United Technologies Corporation (NYSE:UTX) to other stocks, including SAP AG (ADR) (NYSE:SAP), Ambev SA (ADR) (NYSE:ABEV), and Union Pacific Corporation (NYSE:UNP) to get a better sense of its popularity.

In the financial world, there are a large number of tools stock market investors can use to appraise publicly traded companies. A couple of the best tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best money managers can outpace the S&P 500 by a significant amount (see the details here).

Now, let’s analyze the new action regarding United Technologies Corporation (NYSE:UTX).

Hedge fund activity in United Technologies Corporation (NYSE:UTX)

At the end of September, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 16% from the second quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in United Technologies Corporation (NYSE:UTX). Fisher Asset Management has a $727.8 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $509.8 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Seeing as United Technologies Corporation (NYSE:UTX) has faced a falling interest from the smart money, it’s easy to see that there is a sect of hedgies that decided to sell off their positions entirely last quarter. Intriguingly, Gordy Holterman and Derek Dunn’s Overland Advisors cut the largest stake of the “upper crust” of funds followed by Insider Monkey, valued at close to $129 million in stock. Bart Baum’s fund, Ionic Capital Management, also sold off its stock, about $57 million worth of shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to United Technologies Corporation (NYSE:UTX). We will take a look at SAP AG (ADR) (NYSE:SAP), Ambev SA (ADR) (NYSE:ABEV), Union Pacific Corporation (NYSE:UNP), and Banco Santander, S.A. (ADR) (NYSE:SAN). This group of stocks’ market values is similar to United Technologies Corporation (NYSE:UTX)’s market value.

As you can see, these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $674 million. That figure was $2.75 billion in United Technologies Corporation (NYSE:UTX)’s case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand, SAP AG (ADR) (NYSE:SAP) is the least popular one with only 11 bullish hedge fund positions. United Technologies Corporation (NYSE:UTX) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, United Technologies Corporation (NYSE:UTX) might be a better candidate to consider a long position.