Does ABB Ltd (ADR) (NYSE:ABB) 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.
Is ABB Ltd (ADR) (NYSE:ABB) a buy, sell, or hold? The smart money is getting less bullish. The number of bullish hedge fund bets decreased by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Credit Suisse Group AG (ADR) (NYSE:CS), LyondellBasell Industries NV (NYSE:LYB), and Suncor Energy Inc. (USA) (NYSE:SU) to gather more data points.
Follow A B B Ltd (NYSE:ABB)
Follow A B B Ltd (NYSE:ABB)
In the 21st century investor’s toolkit there are a large number of metrics that market participants use to analyze their stock investments. A pair of the less known metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace the broader indices by a solid margin (see the details here).
Now, let’s review the recent action regarding ABB Ltd (ADR) (NYSE:ABB).
Hedge fund activity in ABB Ltd (ADR) (NYSE:ABB)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 18% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in ABB Ltd (ADR) (NYSE:ABB). The fund reportedly holds a $124.2 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $23.8 million stake; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Ed Beddow and William Tichy’s Beddow Capital Management, and Matthew Tewksbury’s Stevens Capital Management.
Judging by the fact that ABB Ltd (ADR) (NYSE:ABB) has witnessed falling interest from the smart money, logic holds that there is a sect of hedge funds that slashed their entire stakes last quarter. At the top of the heap, Kenneth Squire’s 13D Management sold off the largest position of all the hedgies watched by Insider Monkey, comprising about $13.4 million in stock. Michael Lowenstein’s fund, Kensico Capital, also sold off its entire holding, about $7.9 million worth of ABB shares. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to ABB Ltd (ADR) (NYSE:ABB). These stocks are Credit Suisse Group AG (ADR) (NYSE:CS), LyondellBasell Industries NV (NYSE:LYB), Suncor Energy Inc. (USA) (NYSE:SU), and Cognizant Technology Solutions Corp (NASDAQ:CTSH). This group of stocks’ market caps match ABB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CS | 7 | 271645 | 1 |
| LYB | 57 | 3836230 | -4 |
| SU | 28 | 1330765 | -4 |
| CTSH | 49 | 1173517 | 0 |
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1.65 billion. That figure was a minor $163 million in ABB’s case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand Credit Suisse Group AG (ADR) (NYSE:CS) is the least popular one with only 7 bullish hedge fund positions. ABB Ltd (ADR) (NYSE:ABB) 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 LYB might be a better candidate to consider a long position.
