The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Caterpillar Inc. (NYSE:CAT).
Caterpillar Inc. (NYSE:CAT) investors should be aware of an increase in support from the world’s most elite money managers recently. Caterpillar Inc. (NYSE:CAT) was in 62 hedge funds’ portfolios at the end of June. The all time high for this statistic is 63. There were 53 hedge funds in our database with CAT holdings at the end of March. Our calculations also showed that CAT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the 21st century investor’s toolkit there are several gauges shareholders have at their disposal to size up stocks. Two of the most underrated gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the market by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Ray Dalio of Bridgewater Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind we’re going to analyze the recent hedge fund action encompassing Caterpillar Inc. (NYSE:CAT).
Do Hedge Funds Think CAT Is A Good Stock To Buy Now?
At second quarter’s end, a total of 62 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CAT over the last 24 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Bill & Melinda Gates Foundation Trust held the most valuable stake in Caterpillar Inc. (NYSE:CAT), which was worth $2210.4 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $1445.8 million worth of shares. Citadel Investment Group, Diamond Hill Capital, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Caterpillar Inc. (NYSE:CAT), around 9.26% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, designating 2.27 percent of its 13F equity portfolio to CAT.
As aggregate interest increased, key money managers were breaking ground themselves. Renaissance Technologies, created the largest position in Caterpillar Inc. (NYSE:CAT). Renaissance Technologies had $226.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $44.9 million position during the quarter. The other funds with brand new CAT positions are Ray Dalio’s Bridgewater Associates, Alexander Mitchell’s Scopus Asset Management, and Gregg Moskowitz’s Interval Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Caterpillar Inc. (NYSE:CAT) but similarly valued. These stocks are TotalEnergies SE (NYSE:TTE), General Electric Company (NYSE:GE), HSBC Holdings plc (NYSE:HSBC), Vale SA (NYSE:VALE), The Estee Lauder Companies Inc (NYSE:EL), 3M Company (NYSE:MMM), and Advanced Micro Devices, Inc. (NASDAQ:AMD). This group of stocks’ market caps are similar to CAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTE | 15 | 1132420 | -2 |
| GE | 67 | 6087180 | -1 |
| HSBC | 11 | 212763 | -1 |
| VALE | 27 | 3573958 | -4 |
| EL | 50 | 4129744 | -9 |
| MMM | 42 | 1582540 | 1 |
| AMD | 63 | 4610011 | 1 |
| Average | 39.3 | 3046945 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.3 hedge funds with bullish positions and the average amount invested in these stocks was $3047 million. That figure was $5264 million in CAT’s case. General Electric Company (NYSE:GE) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 11 bullish hedge fund positions. Caterpillar Inc. (NYSE:CAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CAT is 85.1. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately CAT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CAT were disappointed as the stock returned -7.6% since the end of June (through 9/27) 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 Caterpillar Inc (NYSE:CAT)
Follow Caterpillar Inc (NYSE:CAT)
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Disclosure: None. This article was originally published at Insider Monkey.
