Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Honeywell International Inc. (NASDAQ:HON) in this article.
Honeywell International Inc. (NASDAQ:HON) has seen an increase in hedge fund sentiment in recent months. Honeywell International Inc. (NASDAQ:HON) was in 56 hedge funds’ portfolios at the end of March. The all time high for this statistic is 58. Our calculations also showed that HON isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the 21st century investor’s toolkit there are many signals investors have at their disposal to value stocks. Two of the less known signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. With all of this in mind we’re going to go over the new hedge fund action surrounding Honeywell International Inc. (NASDAQ:HON).
Do Hedge Funds Think HON Is A Good Stock To Buy Now?
At the end of March, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HON over the last 23 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Diamond Hill Capital was the largest shareholder of Honeywell International Inc. (NASDAQ:HON), with a stake worth $241.1 million reported as of the end of March. Trailing Diamond Hill Capital was Adage Capital Management, which amassed a stake valued at $237.2 million. Millennium Management, Citadel Investment Group, and Two Sigma Advisors 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 SAYA Management allocated the biggest weight to Honeywell International Inc. (NASDAQ:HON), around 12.15% of its 13F portfolio. Pittencrieff Partners – Gabalex Capital is also relatively very bullish on the stock, setting aside 7.67 percent of its 13F equity portfolio to HON.
Consequently, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Honeywell International Inc. (NASDAQ:HON). Balyasny Asset Management had $72.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $44.7 million investment in the stock during the quarter. The other funds with brand new HON positions are Anand Parekh’s Alyeska Investment Group, Benjamin A. Smith’s Laurion Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s go over hedge fund activity in other stocks similar to Honeywell International Inc. (NASDAQ:HON). We will take a look at QUALCOMM, Incorporated (NASDAQ:QCOM), The Boeing Company (NYSE:BA), NextEra Energy, Inc. (NYSE:NEE), United Parcel Service, Inc. (NYSE:UPS), Union Pacific Corporation (NYSE:UNP), Unilever PLC (NYSE:UL), and Linde plc (NYSE:LIN). This group of stocks’ market caps resemble HON’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCOM | 73 | 2765985 | -12 |
| BA | 59 | 1437584 | 4 |
| NEE | 63 | 2725995 | 2 |
| UPS | 44 | 1346598 | -4 |
| UNP | 75 | 4685045 | 7 |
| UL | 20 | 826829 | -5 |
| LIN | 43 | 4636270 | -7 |
| Average | 53.9 | 2632044 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 53.9 hedge funds with bullish positions and the average amount invested in these stocks was $2632 million. That figure was $1731 million in HON’s case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand Unilever PLC (NYSE:UL) is the least popular one with only 20 bullish hedge fund positions. Honeywell International Inc. (NASDAQ:HON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HON is 71.7. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately HON wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HON were disappointed as the stock returned 4.2% since the end of March (through 6/11) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
