We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards AMETEK, Inc. (NYSE:AME) and determine whether hedge funds skillfully traded this stock.
AMETEK, Inc. (NYSE:AME) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 38 hedge funds’ portfolios at the end of September. Our calculations also showed that AME isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare AME to other stocks including Genmab A/S (NASDAQ:GMAB), Stanley Black & Decker, Inc. (NYSE:SWK), and Chewy, Inc. (NYSE:CHWY) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla 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. Keeping this in mind let’s review the recent hedge fund action encompassing AMETEK, Inc. (NYSE:AME).
Do Hedge Funds Think AME Is A Good Stock To Buy Now?
At third quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. By comparison, 37 hedge funds held shares or bullish call options in AME a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in AMETEK, Inc. (NYSE:AME) was held by Millennium Management, which reported holding $289 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $214.2 million position. Other investors bullish on the company included Adage Capital Management, GAMCO Investors, and Giverny Capital. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to AMETEK, Inc. (NYSE:AME), around 17.18% of its 13F portfolio. Giverny Capital is also relatively very bullish on the stock, dishing out 5.67 percent of its 13F equity portfolio to AME.
Seeing as AMETEK, Inc. (NYSE:AME) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who sold off their full holdings by the end of the third quarter. Interestingly, Ray Dalio’s Bridgewater Associates dumped the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $8.5 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dumped about $5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AMETEK, Inc. (NYSE:AME) but similarly valued. We will take a look at Genmab A/S (NASDAQ:GMAB), Stanley Black & Decker, Inc. (NYSE:SWK), Chewy, Inc. (NYSE:CHWY), United Microelectronics Corp (NYSE:UMC), Eversource Energy (NYSE:ES), Las Vegas Sands Corp. (NYSE:LVS), and Yandex NV (NASDAQ:YNDX). This group of stocks’ market valuations resemble AME’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GMAB | 9 | 122715 | 0 |
| SWK | 37 | 776002 | -7 |
| CHWY | 32 | 376172 | -11 |
| UMC | 13 | 151038 | 3 |
| ES | 21 | 137293 | -5 |
| LVS | 40 | 938057 | -8 |
| YNDX | 27 | 1432186 | -4 |
| Average | 25.6 | 561923 | -4.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $1320 million in AME’s case. Las Vegas Sands Corp. (NYSE:LVS) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 9 bullish hedge fund positions. AMETEK, Inc. (NYSE:AME) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AME is 80.3. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on AME as the stock returned 10.4% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
