While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Roper Technologies Inc. (NYSE:ROP).
Is Roper Technologies Inc. (NYSE:ROP) a safe investment right now? Investors who are in the know were becoming less confident. The number of long hedge fund bets fell by 1 in recent months. Roper Technologies Inc. (NYSE:ROP) was in 41 hedge funds’ portfolios at the end of June. The all time high for this statistic is 50. Our calculations also showed that ROP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 42 hedge funds in our database with ROP holdings at the end of March.
Today there are several indicators shareholders have at their disposal to grade publicly traded companies. A pair of the less known indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Charles Akre of Akre Capital Management
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Do Hedge Funds Think ROP Is A Good Stock To Buy Now?
At Q2’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ROP over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Akre Capital Management was the largest shareholder of Roper Technologies Inc. (NYSE:ROP), with a stake worth $782.9 million reported as of the end of June. Trailing Akre Capital Management was Citadel Investment Group, which amassed a stake valued at $229.4 million. Echo Street Capital Management, D E Shaw, and Bristol Gate Capital Partners 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 Lansing Management allocated the biggest weight to Roper Technologies Inc. (NYSE:ROP), around 12.64% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, designating 4.82 percent of its 13F equity portfolio to ROP.
Since Roper Technologies Inc. (NYSE:ROP) has faced bearish sentiment from the smart money, logic holds that there was a specific group of hedge funds who were dropping their positions entirely by the end of the second quarter. It’s worth mentioning that Jason McDougall’s 11 Capital Partners sold off the largest investment of all the hedgies watched by Insider Monkey, comprising close to $14.9 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dumped about $3.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks similar to Roper Technologies Inc. (NYSE:ROP). We will take a look at Palantir Technologies Inc. (NYSE:PLTR), Lululemon Athletica inc. (NASDAQ:LULU), Thomson Reuters Corporation (NYSE:TRI), Johnson Controls International plc (NYSE:JCI), EOG Resources Inc (NYSE:EOG), TC Energy Corporation (NYSE:TRP), and Align Technology, Inc. (NASDAQ:ALGN). This group of stocks’ market caps resemble ROP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLTR | 26 | 1361219 | -6 |
| LULU | 46 | 952983 | 5 |
| TRI | 27 | 354844 | -1 |
| JCI | 39 | 1270005 | -2 |
| EOG | 35 | 411137 | 5 |
| TRP | 22 | 118166 | -3 |
| ALGN | 57 | 2689837 | 8 |
| Average | 36 | 1022599 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1023 million. That figure was $1570 million in ROP’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 22 bullish hedge fund positions. Roper Technologies Inc. (NYSE:ROP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ROP is 55.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately ROP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ROP were disappointed as the stock returned -3.6% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Roper Technologies Inc (NYSE:ROP)
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Disclosure: None. This article was originally published at Insider Monkey.
