A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Eaton Corporation plc (NYSE:ETN).
Eaton Corporation plc (NYSE:ETN) was in 49 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ETN shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 41 hedge funds in our database with ETN positions at the end of the fourth quarter. Our calculations also showed that ETN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Jeffrey Altman of Owl Creek Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let’s take a gander at the recent hedge fund action regarding Eaton Corporation plc (NYSE:ETN).
Do Hedge Funds Think ETN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2020. On the other hand, there were a total of 35 hedge funds with a bullish position in ETN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Eaton Corporation plc (NYSE:ETN). AQR Capital Management has a $167.8 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Lansdowne Partners, managed by Suzi Nutton (CEO), which holds a $136.6 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Brandon Haley’s Holocene Advisors, Israel Englander’s Millennium Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Cartenna Capital allocated the biggest weight to Eaton Corporation plc (NYSE:ETN), around 4.57% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, setting aside 4.45 percent of its 13F equity portfolio to ETN.
Consequently, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Eaton Corporation plc (NYSE:ETN). Marshall Wace LLP had $17.2 million invested in the company at the end of the quarter. Jeffrey Altman’s Owl Creek Asset Management also initiated a $16.5 million position during the quarter. The other funds with brand new ETN positions are Dmitry Balyasny’s Balyasny Asset Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Jinghua Yan’s TwinBeech Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Eaton Corporation plc (NYSE:ETN) but similarly valued. We will take a look at Boston Scientific Corporation (NYSE:BSX), Waste Management, Inc. (NYSE:WM), Emerson Electric Co. (NYSE:EMR), Humana Inc (NYSE:HUM), Northrop Grumman Corporation (NYSE:NOC), Metlife Inc (NYSE:MET), and Atlassian Corporation Plc (NASDAQ:TEAM). This group of stocks’ market valuations are similar to ETN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSX | 44 | 2884401 | -14 |
| WM | 32 | 3290087 | -5 |
| EMR | 45 | 796035 | -1 |
| HUM | 53 | 2878475 | -6 |
| NOC | 40 | 1510503 | 0 |
| MET | 32 | 1147122 | -5 |
| TEAM | 67 | 3955751 | -2 |
| Average | 44.7 | 2351768 | -4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $2352 million. That figure was $1095 million in ETN’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Waste Management, Inc. (NYSE:WM) is the least popular one with only 32 bullish hedge fund positions. Eaton Corporation plc (NYSE:ETN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETN is 64.3. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately ETN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ETN were disappointed as the stock returned 1.2% since the end of March (through 6/18) 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 Eaton Corp Plc (NYSE:ETN)
Follow Eaton Corp Plc (NYSE:ETN)
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Disclosure: None. This article was originally published at Insider Monkey.
