We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards ABB Ltd (NYSE:ABB).
Is ABB Ltd (NYSE:ABB) a good investment right now? It seems like prominent investors are taking an optimistic view. The number of bullish hedge fund bets advanced by 2 in recent months. Our calculations also showed that ABB isn’t among the 30 most popular stocks among hedge funds.
Today there are a multitude of gauges shareholders put to use to size up their holdings. Some of the most under-the-radar gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a healthy margin (see the details here).
Let’s take a peek at the fresh hedge fund action surrounding ABB Ltd (NYSE:ABB).
How have hedgies been trading ABB Ltd (NYSE:ABB)?
At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in ABB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in ABB Ltd (NYSE:ABB), which was worth $212.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $25.3 million worth of shares. Moreover, 13D Management, Beddow Capital Management, and Segantii Capital were also bullish on ABB Ltd (NYSE:ABB), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Segantii Capital, managed by Simon Sadler, established the most valuable position in ABB Ltd (NYSE:ABB). Segantii Capital had $3.3 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $0.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ABB Ltd (NYSE:ABB) but similarly valued. We will take a look at Metlife Inc (NYSE:MET), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Relx PLC (NYSE:RELX), and Marsh & McLennan Companies, Inc. (NYSE:MMC). This group of stocks’ market values match ABB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MET | 24 | 1032382 | 0 |
| REGN | 35 | 1142943 | 5 |
| RELX | 5 | 73822 | 0 |
| MMC | 29 | 659019 | 0 |
| Average | 23.25 | 727042 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $727 million. That figure was $265 million in ABB’s case. Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 5 bullish hedge fund positions. ABB Ltd (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. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately ABB wasn’t in this group. Hedge funds that bet on ABB were disappointed as the stock returned 1.4% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
