Is Adient plc (ADNT) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Adient plc (NYSE:ADNT).

Is ADNT a good stock to buy? Adient plc (NYSE:ADNT) was in 29 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. ADNT shareholders have witnessed a decrease in hedge fund sentiment recently. There were 35 hedge funds in our database with ADNT holdings at the end of June. Our calculations also showed that ADNT 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 let’s take a gander at the key hedge fund action encompassing Adient plc (NYSE:ADNT).

Louis Bacon Moore of Moore Capital

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

Heading into the fourth quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in ADNT over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Among these funds, Lyrical Asset Management held the most valuable stake in Adient plc (NYSE:ADNT), which was worth $195.8 million at the end of the third quarter. On the second spot was Redwood Capital Management which amassed $76.1 million worth of shares. 683 Capital Partners, Lakewood Capital Management, and Clearfield Capital 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 Clearfield Capital allocated the biggest weight to Adient plc (NYSE:ADNT), around 20.97% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, designating 5.84 percent of its 13F equity portfolio to ADNT.

Seeing as Adient plc (NYSE:ADNT) has experienced falling interest from hedge fund managers, it’s easy to see that there was a specific group of fund managers who sold off their positions entirely in the third quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest investment of all the hedgies followed by Insider Monkey, worth an estimated $34.2 million in call options. Ken Griffin’s fund, Citadel Investment Group, also sold off its call options, about $15.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 6 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Adient plc (NYSE:ADNT). We will take a look at Axis Capital Holdings Limited (NYSE:AXS), Casella Waste Systems Inc. (NASDAQ:CWST), Alarm.com Holdings Inc (NASDAQ:ALRM), Leslie’s, Inc. (NASDAQ:LESL), SiTime Corporation (NASDAQ:SITM), BankUnited Inc (NYSE:BKU), and Datto Holding Corp. (NYSE:MSP). All of these stocks’ market caps are similar to ADNT’s market cap.

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As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $660 million. That figure was $494 million in ADNT’s case. Leslie’s, Inc. (NASDAQ:LESL) is the most popular stock in this table. On the other hand Datto Holding Corp. (NYSE:MSP) is the least popular one with only 11 bullish hedge fund positions. Adient plc (NYSE:ADNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADNT is 62.1. 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. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately ADNT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ADNT were disappointed as the stock returned 2.4% since the end of September (through 11/30) 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.