Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Ingersoll-Rand Plc (NYSE:IR) a marvelous stock to buy now? Prominent investors are turning bullish. The number of long hedge fund bets inched up by 9 recently. Our calculations also showed that IR isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the new hedge fund action encompassing Ingersoll-Rand Plc (NYSE:IR).
How are hedge funds trading Ingersoll-Rand Plc (NYSE:IR)?
Heading into the fourth quarter of 2018, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the second quarter of 2018. By comparison, 34 hedge funds held shares or bullish call options in IR heading into this year. 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, Generation Investment Management held the most valuable stake in Ingersoll-Rand Plc (NYSE:IR), which was worth $437.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $316.3 million worth of shares. Moreover, Millennium Management, Alyeska Investment Group, and AQR Capital Management were also bullish on Ingersoll-Rand Plc (NYSE:IR), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have jumped into Ingersoll-Rand Plc (NYSE:IR) headfirst. Holocene Advisors, managed by Brandon Haley, established the most valuable call position in Ingersoll-Rand Plc (NYSE:IR). Holocene Advisors had $34.3 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $24.2 million position during the quarter. The other funds with brand new IR positions are Matthew Tewksbury’s Stevens Capital Management, Israel Englander’s Millennium Management, and Ilya Boroditsky’s Precision Path Capital.
Let’s also examine hedge fund activity in other stocks similar to Ingersoll-Rand Plc (NYSE:IR). We will take a look at AvalonBay Communities Inc (NYSE:AVB), Weyerhaeuser Company (NYSE:WY), Equity Residential (NYSE:EQR), and Brown-Forman Corporation (NYSE:BF). This group of stocks’ market valuations are similar to IR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVB | 26 | 970758 | 1 |
| WY | 35 | 648691 | 7 |
| EQR | 23 | 432981 | -1 |
| BF | 22 | 725377 | 3 |
| Average | 26.5 | 694452 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $694 million. That figure was $2.10 billion in IR’s case. Weyerhaeuser Co. (NYSE:WY) is the most popular stock in this table. On the other hand Brown-Forman Corporation (NYSE:BF) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Ingersoll-Rand Plc (NYSE:IR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
