Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Otis Worldwide Corporation (NYSE:OTIS) in this article.
Is OTIS stock a buy or sell? Otis Worldwide Corporation (NYSE:OTIS) has experienced an increase in enthusiasm from smart money of late. Otis Worldwide Corporation (NYSE:OTIS) was in 59 hedge funds’ portfolios at the end of December. The all time high for this statistic is 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 53 hedge funds in our database with OTIS positions at the end of the third quarter. Our calculations also showed that OTIS isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).
Aaron Cowen of Suvretta Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). With all of this in mind we’re going to take a peek at the new hedge fund action encompassing Otis Worldwide Corporation (NYSE:OTIS).
Do Hedge Funds Think OTIS Is A Good Stock To Buy Now?
At Q4’s end, a total of 59 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the third quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in OTIS a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Otis Worldwide Corporation (NYSE:OTIS) was held by Viking Global, which reported holding $364.6 million worth of stock at the end of December. It was followed by Deccan Value Advisors with a $357.3 million position. Other investors bullish on the company included Ako Capital, Suvretta Capital Management, and Gates Capital Management. In terms of the portfolio weights assigned to each position Deccan Value Advisors allocated the biggest weight to Otis Worldwide Corporation (NYSE:OTIS), around 14.5% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, earmarking 11.4 percent of its 13F equity portfolio to OTIS.
As one would reasonably expect, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in Otis Worldwide Corporation (NYSE:OTIS). Two Sigma Advisors had $17.4 million invested in the company at the end of the quarter. Terry Smith’s Fundsmith Long/Short Fund also initiated a $4.9 million position during the quarter. The other funds with brand new OTIS positions are Ian Simm’s Impax Asset Management, Jonathan Dawson’s Southport Management, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Otis Worldwide Corporation (NYSE:OTIS) but similarly valued. We will take a look at Rockwell Automation Inc. (NYSE:ROK), EOG Resources Inc (NYSE:EOG), Banco Bradesco SA (NYSE:BBD), WEC Energy Group, Inc. (NYSE:WEC), Teladoc Health, Inc (NYSE:TDOC), Huazhu Group Limited (NASDAQ:HTHT), and Corteva, Inc. (NYSE:CTVA). This group of stocks’ market caps are closest to OTIS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROK | 35 | 635317 | -9 |
| EOG | 45 | 750152 | 9 |
| BBD | 17 | 407632 | -3 |
| WEC | 25 | 245402 | 3 |
| TDOC | 50 | 2616714 | 3 |
| HTHT | 23 | 612105 | 2 |
| CTVA | 38 | 1398326 | 2 |
| Average | 33.3 | 952235 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $952 million. That figure was $2512 million in OTIS’s case. Teladoc Health, Inc (NYSE:TDOC) is the most popular stock in this table. On the other hand Banco Bradesco SA (NYSE:BBD) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Otis Worldwide Corporation (NYSE:OTIS) is more popular among hedge funds. Our overall hedge fund sentiment score for OTIS is 90. 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 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately OTIS wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on OTIS were disappointed as the stock returned -0.7% since the end of the fourth quarter (through 3/19) 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 most of these stocks already outperformed the market since 2019.
Follow Otis Worldwide Corp (NYSE:OTIS)
Follow Otis Worldwide Corp (NYSE:OTIS)
Disclosure: None. This article was originally published at Insider Monkey.
