The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Johnson Controls International plc (NYSE:JCI) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Johnson Controls International plc (NYSE:JCI) was in 28 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 55. JCI shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 37 hedge funds in our database with JCI positions at the end of the first quarter. Our calculations also showed that JCI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a large number of tools stock traders use to assess stocks. A couple of the most innovative tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can trounce the broader indices by a very impressive amount (see the details here).
Joel Greenblatt of Gotham Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a glance at the fresh hedge fund action surrounding Johnson Controls International plc (NYSE:JCI).
What does smart money think about Johnson Controls International plc (NYSE:JCI)?
Heading into the third quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JCI over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Johnson Controls International plc (NYSE:JCI) was held by Holocene Advisors, which reported holding $189.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $175.8 million position. Other investors bullish on the company included AQR Capital Management, D E Shaw, and Scopia Capital. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Johnson Controls International plc (NYSE:JCI), around 9.64% of its 13F portfolio. Arosa Capital Management is also relatively very bullish on the stock, designating 1.9 percent of its 13F equity portfolio to JCI.
Judging by the fact that Johnson Controls International plc (NYSE:JCI) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedgies that decided to sell off their entire stakes in the second quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest position of the 750 funds followed by Insider Monkey, worth about $76.9 million in stock, and Jim Simons (founder)’s Renaissance Technologies was right behind this move, as the fund sold off about $18.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 9 funds in the second quarter.
Let’s now review hedge fund activity in other stocks similar to Johnson Controls International plc (NYSE:JCI). We will take a look at Fresenius Medical Care AG & Co. (NYSE:FMS), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), RingCentral Inc (NYSE:RNG), PPG Industries, Inc. (NYSE:PPG), ANSYS, Inc. (NASDAQ:ANSS), Okta, Inc. (NASDAQ:OKTA), and HP Inc. (NYSE:HPQ). This group of stocks’ market valuations are closest to JCI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMS | 6 | 11727 | -4 |
| WLTW | 49 | 2288145 | 6 |
| RNG | 62 | 3647093 | -5 |
| PPG | 36 | 261423 | 1 |
| ANSS | 40 | 1322878 | 9 |
| OKTA | 60 | 1990664 | 12 |
| HPQ | 35 | 1106876 | -8 |
| Average | 41.1 | 1518401 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $1518 million. That figure was $1099 million in JCI’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 6 bullish hedge fund positions. Johnson Controls International plc (NYSE:JCI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JCI is 30.9. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. A small number of hedge funds were also right about betting on JCI as the stock returned 19.4% since the end of June (through September 25th) and outperformed the market by an even larger margin.
Follow Johnson Controls Inc (Old Filings) (NYSE:JCI)
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Disclosure: None. This article was originally published at Insider Monkey.
