Is Roper Industries, Inc. (NYSE:ROP) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Roper Industries, Inc. (NYSE:ROP) investors should pay attention to an increase in support from the world’s most elite money managers recently. ROP was in 32 hedge funds’ portfolios at the end of September. There were 26 hedge funds in our database with ROP positions at the end of the previous quarter. Our calculations also showed that ROP isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to view the new hedge fund action regarding Roper Industries, Inc. (NYSE:ROP).
Hedge fund activity in Roper Industries, Inc. (NYSE:ROP)
Heading into the fourth quarter of 2018, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ROP over the last 13 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Akre Capital Management was the largest shareholder of Roper Industries, Inc. (NYSE:ROP), with a stake worth $461.8 million reported as of the end of September. Trailing Akre Capital Management was Citadel Investment Group, which amassed a stake valued at $61.5 million. Waratah Capital Advisors, Marshall Wace LLP, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers have been driving this bullishness. Ascend Capital, managed by Malcolm Fairbairn, established the largest position in Roper Industries, Inc. (NYSE:ROP). Ascend Capital had $25.1 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $9.1 million investment in the stock during the quarter. The other funds with brand new ROP positions are Bruce Kovner’s Caxton Associates LP, Paul Tudor Jones’s Tudor Investment Corp, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks similar to Roper Industries, Inc. (NYSE:ROP). We will take a look at Concho Resources Inc. (NYSE:CXO), Canadian Pacific Railway Limited (NYSE:CP), Advanced Micro Devices, Inc. (NASDAQ:AMD), and TD Ameritrade Holding Corp. (NYSE:AMTD). This group of stocks’ market values match ROP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CXO | 32 | 547181 | 2 |
| CP | 30 | 2732916 | 5 |
| AMD | 28 | 600368 | 1 |
| AMTD | 18 | 575391 | -10 |
| Average | 27 | 1113964 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1.11 billion. That figure was $861 million in ROP’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand TD Ameritrade Holding Corp. (NYSE:AMTD) is the least popular one with only 18 bullish hedge fund positions. Roper Industries, Inc. (NYSE:ROP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CXO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
