Here is What Hedge Funds Think About Rockwell Automation Inc. (ROK)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Rockwell Automation Inc. (NYSE:ROK).

Is Rockwell Automation Inc. (NYSE:ROK) a bargain? The best stock pickers were betting on the stock. The number of long hedge fund bets rose by 4 recently. Rockwell Automation Inc. (NYSE:ROK) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that ROK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind we’re going to review the key hedge fund action surrounding Rockwell Automation Inc. (NYSE:ROK).

Tom Gayner of Markel Gayner Asset Management

Do Hedge Funds Think ROK Is A Good Stock To Buy Now?

At third quarter’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the second quarter of 2021. By comparison, 44 hedge funds held shares or bullish call options in ROK a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ian Simm’s Impax Asset Management has the most valuable position in Rockwell Automation Inc. (NYSE:ROK), worth close to $205.4 million, amounting to 0.8% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $63.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Ken Griffin’s Citadel Investment Group, Ken Fisher’s Fisher Asset Management and Tom Gayner’s Markel Gayner Asset Management. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Rockwell Automation Inc. (NYSE:ROK), around 1.78% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, setting aside 1.3 percent of its 13F equity portfolio to ROK.

Now, key hedge funds were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the largest position in Rockwell Automation Inc. (NYSE:ROK). Two Sigma Advisors had $17.9 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new ROK investors: Andrew Byington’s Appian Way Asset Management, Gregg Moskowitz’s Interval Partners, and Israel Englander’s Millennium Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Rockwell Automation Inc. (NYSE:ROK) but similarly valued. These stocks are First Republic Bank (NYSE:FRC), International Flavors & Fragrances Inc (NYSE:IFF), CoStar Group Inc (NASDAQ:CSGP), PPG Industries, Inc. (NYSE:PPG), BeiGene, Ltd. (NASDAQ:BGNE), Xcel Energy Inc (NASDAQ:XEL), and The Trade Desk, Inc. (NASDAQ:TTD). This group of stocks’ market values are similar to ROK’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $2011 million. That figure was $520 million in ROK’s case. International Flavors & Fragrances Inc (NYSE:IFF) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 16 bullish hedge fund positions. Rockwell Automation Inc. (NYSE:ROK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ROK is 48.1. 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. 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. Hedge funds were also right about betting on ROK as the stock returned 14.7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.