Is FTV Stock A Buy or Sell?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Fortive Corporation (NYSE:FTV)? The smart money sentiment can provide an answer to this question.

Is FTV stock a buy or sell? Prominent investors were cutting their exposure. The number of bullish hedge fund positions were trimmed by 1 recently. Fortive Corporation (NYSE:FTV) was in 33 hedge funds’ portfolios at the end of December. The all time high for this statistic is 46. Our calculations also showed that FTV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 34 hedge funds in our database with FTV positions at the end of the third quarter.

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 124 percentage points since March 2017 (see the details here).

Andreas Halvorsen of Viking Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Now we’re going to take a glance at the recent hedge fund action regarding Fortive Corporation (NYSE:FTV).

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

At the end of December, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. On the other hand, there were a total of 43 hedge funds with a bullish position in FTV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Fortive Corporation (NYSE:FTV) was held by Viking Global, which reported holding $564 million worth of stock at the end of December. It was followed by Select Equity Group with a $180.6 million position. Other investors bullish on the company included Arrowstreet Capital, Senator Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Viking Global allocated the biggest weight to Fortive Corporation (NYSE:FTV), around 1.55% of its 13F portfolio. Senator Investment Group is also relatively very bullish on the stock, designating 0.94 percent of its 13F equity portfolio to FTV.

Due to the fact that Fortive Corporation (NYSE:FTV) has faced a decline in interest from hedge fund managers, we can see that there is a sect of funds that elected to cut their entire stakes heading into Q1. Interestingly, Dan Loeb’s Third Point sold off the largest position of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $228.6 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund sold off about $111.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q1.

Let’s also examine hedge fund activity in other stocks similar to Fortive Corporation (NYSE:FTV). We will take a look at Arthur J. Gallagher & Co. (NYSE:AJG), Edison International (NYSE:EIX), Maxim Integrated Products Inc. (NASDAQ:MXIM), Rogers Communications Inc. (NYSE:RCI), Tyson Foods, Inc. (NYSE:TSN), DTE Energy Company (NYSE:DTE), and Equifax Inc. (NYSE:EFX). This group of stocks’ market caps are similar to FTV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1164 million. That figure was $1117 million in FTV’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 15 bullish hedge fund positions. Fortive Corporation (NYSE:FTV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTV is 48.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately FTV wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FTV were disappointed as the stock returned 0.2% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.