Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Honeywell International Inc. (NASDAQ:HON) based on that data and determine whether they were really smart about the stock.
Is Honeywell International Inc. (NASDAQ:HON) a good investment today? Prominent investors were cutting their exposure. The number of long hedge fund bets went down by 12 lately. Honeywell International Inc. (NASDAQ:HON) was in 45 hedge funds’ portfolios at the end of September. 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 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. Now we’re going to check out the new hedge fund action regarding Honeywell International Inc. (NASDAQ:HON).
David Siegel of Two Sigma Advisors
Do Hedge Funds Think HON Is A Good Stock To Buy Now?
At the end of September, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 41 hedge funds with a bullish position in HON a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Honeywell International Inc. (NASDAQ:HON), which was worth $177.7 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $148.3 million worth of shares. Millennium Management, D E Shaw, and GAMCO Investors 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 Pittencrieff Partners – Gabalex Capital allocated the biggest weight to Honeywell International Inc. (NASDAQ:HON), around 6.87% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, earmarking 3.24 percent of its 13F equity portfolio to HON.
Seeing as Honeywell International Inc. (NASDAQ:HON) has experienced bearish sentiment from the smart money, it’s safe to say that there was a specific group of hedgies who sold off their entire stakes in the third quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $236.3 million in call options. Alexander Mitchell’s fund, Scopus Asset Management, also dumped its call options, about $21.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 12 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Honeywell International Inc. (NASDAQ:HON). We will take a look at QUALCOMM, Incorporated (NASDAQ:QCOM), Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), Lowe’s Companies, Inc. (NYSE:LOW), Unilever PLC (NYSE:UL), The Charles Schwab Corporation (NYSE:SCHW), and Sony Group Corp (NYSE:SONY). This group of stocks’ market caps are similar to HON’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCOM | 70 | 3519652 | -2 |
| C | 79 | 5587345 | -8 |
| RY | 16 | 1103417 | -2 |
| LOW | 60 | 5080325 | -3 |
| UL | 17 | 876681 | -2 |
| SCHW | 59 | 4578571 | -13 |
| SONY | 19 | 388862 | -1 |
| Average | 45.7 | 3019265 | -4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.7 hedge funds with bullish positions and the average amount invested in these stocks was $3019 million. That figure was $928 million in HON’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. Honeywell International Inc. (NASDAQ:HON) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HON is 39.3. 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 negative signal and 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, HON wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HON investors were disappointed as the stock returned -3.3% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
