The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Honeywell International Inc. (NYSE:HON).
Honeywell International Inc. (NYSE:HON) has experienced an increase in activity from the world’s largest hedge funds lately. Honeywell International Inc. (NYSE:HON) was in 45 hedge funds’ portfolios at the end of December. The all time high for this statistic is 58. Our calculations also showed that HON isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds’ moves today.
Ric Dillon of Diamond Hill Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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. Keeping this in mind let’s analyze the latest hedge fund action regarding Honeywell International Inc. (NYSE:HON).
Do Hedge Funds Think HON Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HON over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Diamond Hill Capital was the largest shareholder of Honeywell International Inc. (NYSE:HON), with a stake worth $243.9 million reported as of the end of December. Trailing Diamond Hill Capital was GAMCO Investors, which amassed a stake valued at $92.9 million. Millennium Management, Adage Capital Management, and Two Sigma Advisors 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 Pittencrieff Partners – Gabalex Capital allocated the biggest weight to Honeywell International Inc. (NYSE:HON), around 8.39% of its 13F portfolio. SAYA Management is also relatively very bullish on the stock, setting aside 7.86 percent of its 13F equity portfolio to HON.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, created the most outsized position in Honeywell International Inc. (NYSE:HON). Scopus Asset Management had $26.8 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $14.8 million investment in the stock during the quarter. The other funds with brand new HON positions are Michael Gelband’s ExodusPoint Capital, Anand More’s SAYA Management, and Catherine D. Wood’s ARK Investment Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Honeywell International Inc. (NYSE:HON) but similarly valued. We will take a look at United Parcel Service, Inc. (NYSE:UPS), Union Pacific Corporation (NYSE:UNP), Bristol Myers Squibb Company (NYSE:BMY), Linde plc (NYSE:LIN), Shopify Inc (NYSE:SHOP), Anheuser-Busch InBev SA/NV (NYSE:BUD), and JD.Com Inc (NASDAQ:JD). This group of stocks’ market valuations match HON’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UPS | 48 | 1253721 | -9 |
| UNP | 68 | 3539131 | -6 |
| BMY | 131 | 6088294 | 7 |
| LIN | 50 | 3950824 | -10 |
| SHOP | 90 | 8723023 | 9 |
| BUD | 18 | 1294786 | 0 |
| JD | 89 | 14395875 | 4 |
| Average | 70.6 | 5606522 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 70.6 hedge funds with bullish positions and the average amount invested in these stocks was $5607 million. That figure was $984 million in HON’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand Anheuser-Busch InBev SA/NV (NYSE:BUD) is the least popular one with only 18 bullish hedge fund positions. Honeywell International Inc. (NYSE:HON) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HON is 44.2. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and surpassed the market again by 1.6 percentage points. Unfortunately HON wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HON investors were disappointed as the stock returned 5.3% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
