Is JCI Stock A Buy or Sell?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Johnson Controls International plc (NYSE:JCI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is JCI stock a buy? Johnson Controls International plc (NYSE:JCI) investors should pay attention to an increase in hedge fund sentiment of late. Johnson Controls International plc (NYSE:JCI) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 55. There were 24 hedge funds in our database with JCI holdings at the end of September. Our calculations also showed that JCI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In today’s marketplace there are several formulas shareholders employ to size up stocks. A pair of the most under-the-radar formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the broader indices by a healthy margin (see the details here).

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. Keeping this in mind let’s check out the latest hedge fund action encompassing Johnson Controls International plc (NYSE:JCI).

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

At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in JCI a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Johnson Controls International plc (NYSE:JCI), which was worth $138.2 million at the end of the fourth quarter. On the second spot was GLG Partners which amassed $94.7 million worth of shares. Holocene Advisors, Citadel Investment Group, and Millennium Management 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 SAYA Management allocated the biggest weight to Johnson Controls International plc (NYSE:JCI), around 9.38% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, setting aside 3.24 percent of its 13F equity portfolio to JCI.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Renaissance Technologies, founded by Jim Simons, established the largest position in Johnson Controls International plc (NYSE:JCI). Renaissance Technologies had $51 million invested in the company at the end of the quarter. Anand More’s SAYA Management also initiated a $16.1 million position during the quarter. The following funds were also among the new JCI investors: Gregg Moskowitz’s Interval Partners, John Overdeck and David Siegel’s Two Sigma Advisors, and Charles Davidson and Joseph Jacobs’s Wexford Capital.

Let’s also examine hedge fund activity in other stocks similar to Johnson Controls International plc (NYSE:JCI). We will take a look at TransDigm Group Incorporated (NYSE:TDG), Cummins Inc. (NYSE:CMI), Paychex, Inc. (NASDAQ:PAYX), STMicroelectronics N.V. (NYSE:STM), CRH PLC (NYSE:CRH), The Allstate Corporation (NYSE:ALL), and V.F. Corporation (NYSE:VFC). This group of stocks’ market caps match JCI’s market cap.

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As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $1496 million. That figure was $795 million in JCI’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 7 bullish hedge fund positions. Johnson Controls International plc (NYSE:JCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JCI is 52.2. 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. 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 still beat the market by 0.4 percentage points. Hedge funds were also right about betting on JCI as the stock returned 29.1% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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