Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 20 stock picks easily bested the broader market, at 18.7% compared to 12.1%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Keysight Technologies Inc (NYSE:KEYS) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that keys isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are viewed as underperforming, old investment tools of years past. While there are over 8000 funds trading at present, Our researchers look at the upper echelon of this group, approximately 750 funds. These hedge fund managers shepherd most of the hedge fund industry’s total capital, and by following their inimitable stock picks, Insider Monkey has formulated a number of investment strategies that have historically surpassed the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let’s view the new hedge fund action surrounding Keysight Technologies Inc (NYSE:KEYS).
How are hedge funds trading Keysight Technologies Inc (NYSE:KEYS)?
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KEYS over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Keysight Technologies Inc (NYSE:KEYS), which was worth $251.7 million at the end of the first quarter. On the second spot was Ariel Investments which amassed $133.8 million worth of shares. Moreover, Renaissance Technologies, Millennium Management, and Jericho Capital Asset Management were also bullish on Keysight Technologies Inc (NYSE:KEYS), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds were leading the bulls’ herd. Jericho Capital Asset Management, managed by Josh Resnick, assembled the most outsized position in Keysight Technologies Inc (NYSE:KEYS). Jericho Capital Asset Management had $70.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $34.6 million position during the quarter. The other funds with brand new KEYS positions are Francois Rochon’s Giverny Capital, Louis Navellier’s Navellier & Associates, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Keysight Technologies Inc (NYSE:KEYS) but similarly valued. We will take a look at L3 Technologies, Inc. (NYSE:LLL), Garmin Ltd. (NASDAQ:GRMN), Genuine Parts Company (NYSE:GPC), and Omnicom Group Inc. (NYSE:OMC). This group of stocks’ market caps resemble KEYS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LLL | 28 | 1233217 | 6 |
| GRMN | 27 | 512815 | -4 |
| GPC | 22 | 326495 | -7 |
| OMC | 20 | 661219 | 2 |
| Average | 24.25 | 683437 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $683 million. That figure was $967 million in KEYS’s case. L3 Technologies, Inc. (NYSE:LLL) is the most popular stock in this table. On the other hand Omnicom Group Inc. (NYSE:OMC) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Keysight Technologies Inc (NYSE:KEYS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately KEYS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on KEYS were disappointed as the stock returned -8.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
