Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Linde plc (NYSE:LIN).
Linde plc (NYSE:LIN) investors should pay attention to a decrease in support from the world’s most elite money managers of late. Linde plc (NYSE:LIN) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 60. Our calculations also showed that LIN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to check out the fresh hedge fund action regarding Linde plc (NYSE:LIN).
Do Hedge Funds Think LIN Is A Good Stock To Buy Now?
At Q3’s end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LIN over the last 25 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Ako Capital held the most valuable stake in Linde plc (NYSE:LIN), which was worth $1123 million at the end of the third quarter. On the second spot was Egerton Capital Limited which amassed $1052.1 million worth of shares. Impax Asset Management, Holocene Advisors, and Millennium Management 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 Ako Capital allocated the biggest weight to Linde plc (NYSE:LIN), around 11.64% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, dishing out 7.98 percent of its 13F equity portfolio to LIN.
Seeing as Linde plc (NYSE:LIN) has witnessed a decline in interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers who sold off their entire stakes in the third quarter. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital cut the largest investment of the 750 funds followed by Insider Monkey, comprising an estimated $300.9 million in stock, and Renaissance Technologies was right behind this move, as the fund sold off about $145.7 million worth. These moves are interesting, as total hedge fund interest was cut by 9 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Linde plc (NYSE:LIN) but similarly valued. These stocks are Charter Communications, Inc. (NASDAQ:CHTR), Philip Morris International Inc. (NYSE:PM), Intuit Inc. (NASDAQ:INTU), Honeywell International Inc. (NYSE:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), Citigroup Inc. (NYSE:C), and Royal Bank of Canada (NYSE:RY). All of these stocks’ market caps resemble LIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHTR | 74 | 18794064 | -1 |
| PM | 48 | 5924682 | 2 |
| INTU | 64 | 6152464 | -2 |
| HON | 45 | 927738 | -12 |
| QCOM | 70 | 3519652 | -2 |
| C | 79 | 5587345 | -8 |
| RY | 16 | 1103417 | -2 |
| Average | 56.6 | 6001337 | -3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.6 hedge funds with bullish positions and the average amount invested in these stocks was $6001 million. That figure was $4769 million in LIN’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. Linde plc (NYSE:LIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LIN is 42.8. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on LIN as the stock returned 8.4% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.
Follow Linde Plc (NYSE:LIN)
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Disclosure: None. This article was originally published at Insider Monkey.
