Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
General Electric Company (NYSE:GE) was in 74 hedge funds’ portfolios at the end of the third quarter of 2015. GE has seen an increase in hedge fund interest of late. There were 70 hedge funds in our database with GE positions at the end of the previous quarter. At the end of this article we will also compare GE to other stocks, including Facebook Inc (NASDAQ:FB), China Mobile Ltd. (ADR) (NYSE:CHL), and Amazon.com, Inc. (NASDAQ:AMZN) to get a better sense of its popularity.
Follow General Electric Co (NYSE:GE)
Follow General Electric Co (NYSE:GE)
In the 21st century investor’s toolkit there are many tools shareholders employ to appraise their holdings. A duo of the most under-the-radar tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a solid amount (see the details here).
Keeping this in mind, we’re going to review the key action regarding General Electric Company (NYSE:GE).
What does the smart money think about General Electric Company (NYSE:GE)?
At Q3’s end, a total of 74 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 6% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Trian Partners, managed by Nelson Peltz, holds the biggest position in General Electric Company (NYSE:GE), worth an estimated $2.28 billion and comprising 19.5% of its 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, run by Ken Fisher, which holds a $778.1 million position; 1.6% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC.
Consequently, key money managers were breaking ground themselves. Trian Partners, managed by Nelson Peltz, created the largest position in General Electric Company (NYSE:GE), worth $2.28 billion as mentioned earlier. Dmitry Balyasny’s Balyasny Asset Management also made a $62.7 million investment in the stock during the quarter. The other funds with brand new GE positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Osterweis’s Osterweis Capital Management, and Daniel S. Och’s OZ Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as General Electric Company (NYSE:GE) but similarly valued. These stocks are Facebook Inc (NASDAQ:FB), China Mobile Ltd. (ADR) (NYSE:CHL), Amazon.com, Inc. (NASDAQ:AMZN), and Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY). This group of stocks’ market valuations are closest to GE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FB | 128 | 8955439 | -5 |
| CHL | 20 | 213813 | -7 |
| AMZN | 113 | 14981060 | 10 |
| NSRGY | 5 | 1202191 | -1 |
As you can see these stocks had an average of 67 hedge funds with bullish positions and the average amount invested in these stocks was $6.34 billion. That figure was $5.95 billion in GE’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table, while Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY) is the laggard with only 5 bullish hedge fund positions. General Electric Company (NYSE:GE) is not the most popular stock in this group, but hedge fund interest is still above average. While this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FB might be a better candidate to consider a long position.
