Hedge Funds Are Selling Sensata Technologies Holding plc (ST)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Sensata Technologies Holding plc (NYSE:ST) to find out whether there were any major changes in hedge funds’ views.

Sensata Technologies Holding plc (NYSE:ST) shareholders have witnessed a decrease in hedge fund sentiment recently. Sensata Technologies Holding plc (NYSE:ST) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. Our calculations also showed that ST isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s view the key hedge fund action encompassing Sensata Technologies Holding plc (NYSE:ST).

William Gray of Orbis Investment Management

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

At the end of September, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ST over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the number one position in Sensata Technologies Holding plc (NYSE:ST). Generation Investment Management has a $593.1 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $488.7 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include William B. Gray’s Orbis Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to Sensata Technologies Holding plc (NYSE:ST), around 3.02% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, earmarking 2.83 percent of its 13F equity portfolio to ST.

Due to the fact that Sensata Technologies Holding plc (NYSE:ST) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital dropped the largest stake of all the hedgies watched by Insider Monkey, comprising about $158 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund said goodbye to about $3.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Sensata Technologies Holding plc (NYSE:ST). These stocks are Alleghany Corporation (NYSE:Y), Western Midstream Partners, LP (NYSE:WES), Cameco Corporation (NYSE:CCJ), Vornado Realty Trust (NYSE:VNO), Flex Ltd. (NASDAQ:FLEX), Ovintiv Inc. (NYSE:OVV), and The Gap Inc. (NYSE:GPS). All of these stocks’ market caps resemble ST’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $1546 million in ST’s case. Ovintiv Inc. (NYSE:OVV) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 10 bullish hedge fund positions. Sensata Technologies Holding plc (NYSE:ST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ST is 53.5. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately ST wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ST investors were disappointed as the stock returned 1.8% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.