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 Fortive Corporation (NYSE:FTV).
Fortive Corporation (NYSE:FTV) investors should pay attention to a decrease in hedge fund interest lately. Fortive Corporation (NYSE:FTV) was in 27 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 46. There were 33 hedge funds in our database with FTV positions at the end of the fourth quarter. Our calculations also showed that FTV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Now we’re going to take a look at the latest hedge fund action regarding Fortive Corporation (NYSE:FTV).
Do Hedge Funds Think FTV Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FTV over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in Fortive Corporation (NYSE:FTV), which was worth $790.5 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $233.1 million worth of shares. Select Equity Group, Citadel Investment Group, and Renaissance Technologies 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 Viking Global allocated the biggest weight to Fortive Corporation (NYSE:FTV), around 2.35% of its 13F portfolio. Senator Investment Group is also relatively very bullish on the stock, designating 1.23 percent of its 13F equity portfolio to FTV.
Because Fortive Corporation (NYSE:FTV) has faced declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies that decided to sell off their entire stakes heading into Q2. Interestingly, Daniel S. Och’s OZ Management cut the biggest position of the 750 funds watched by Insider Monkey, totaling close to $14.9 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund sold off about $6.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q2.
Let’s go over hedge fund activity in other stocks similar to Fortive Corporation (NYSE:FTV). These stocks are Hartford Financial Services Group Inc (NYSE:HIG), Itau Unibanco Holding SA (NYSE:ITUB), Trip.com Group Limited (NASDAQ:TCOM), United Rentals, Inc. (NYSE:URI), Canon Inc. (NYSE:CAJ), Synchrony Financial (NYSE:SYF), and Coca-Cola European Partners plc (NYSE:CCEP). This group of stocks’ market valuations are closest to FTV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HIG | 57 | 1860836 | 21 |
| ITUB | 12 | 180456 | -7 |
| TCOM | 35 | 2144297 | 1 |
| URI | 41 | 1021749 | -5 |
| CAJ | 9 | 59274 | 2 |
| SYF | 49 | 1861601 | -1 |
| CCEP | 25 | 1110385 | -3 |
| Average | 32.6 | 1176943 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $1177 million. That figure was $1697 million in FTV’s case. Hartford Financial Services Group Inc (NYSE:HIG) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 9 bullish hedge fund positions. Fortive Corporation (NYSE:FTV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FTV is 35.4. 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately FTV wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FTV investors were disappointed as the stock returned 0.2% since the end of March (through 7/9) 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 most of these stocks already outperformed the market in 2021.
Follow Fortive Corp (NYSE:FTV)
Follow Fortive Corp (NYSE:FTV)
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Disclosure: None. This article was originally published at Insider Monkey.
