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 Emerson Electric Co. (NYSE:EMR) based on that data.
Is EMR a good stock to buy? Emerson Electric Co. (NYSE:EMR) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. Emerson Electric Co. (NYSE:EMR) was in 41 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that EMR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Michael Lowenstein of Kensico Capital
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 take a look at the fresh hedge fund action surrounding Emerson Electric Co. (NYSE:EMR).
Do Hedge Funds Think EMR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EMR over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Emerson Electric Co. (NYSE:EMR) was held by AQR Capital Management, which reported holding $157.2 million worth of stock at the end of September. It was followed by Adage Capital Management with a $118.4 million position. Other investors bullish on the company included Two Sigma Advisors, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Southport Management allocated the biggest weight to Emerson Electric Co. (NYSE:EMR), around 3.58% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, designating 1.69 percent of its 13F equity portfolio to EMR.
Due to the fact that Emerson Electric Co. (NYSE:EMR) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there exists a select few hedgies that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that David Tepper’s Appaloosa Management LP sold off the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth about $71 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund cut about $15.4 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Emerson Electric Co. (NYSE:EMR) but similarly valued. These stocks are CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Relx PLC (NYSE:RELX), UBS Group AG (NYSE:UBS), General Dynamics Corporation (NYSE:GD), Thomson Reuters Corporation (NYSE:TRI), Baidu, Inc. (NASDAQ:BIDU), and Honda Motor Co Ltd (NYSE:HMC). This group of stocks’ market values are similar to EMR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRWD | 74 | 6742307 | 8 |
| RELX | 7 | 66312 | 1 |
| UBS | 15 | 166803 | 0 |
| GD | 36 | 6719691 | -1 |
| TRI | 27 | 246145 | 0 |
| BIDU | 44 | 2004620 | -15 |
| HMC | 12 | 338639 | 2 |
| Average | 30.7 | 2326360 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $2326 million. That figure was $671 million in EMR’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 7 bullish hedge fund positions. Emerson Electric Co. (NYSE:EMR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EMR is 53.1. 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 EMR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EMR were disappointed as the stock returned -6.3% 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.
Follow Emerson Electric Co (NYSE:EMR)
Follow Emerson Electric Co (NYSE:EMR)
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Disclosure: None. This article was originally published at Insider Monkey.
