Was The Smart Money Right About Linde plc (LIN)?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Linde plc (NYSE:LIN) makes for a good investment right now.

Linde plc (NYSE:LIN) has seen a decrease in enthusiasm from smart money in recent months. Linde plc (NYSE:LIN) was in 50 hedge funds’ portfolios at the end of December. The all time high for this statistic is 60. Our calculations also showed that LIN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

To most investors, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, We look at the bigwigs of this club, about 850 funds. It is estimated that this group of investors administer the lion’s share of the hedge fund industry’s total capital, and by tailing their matchless stock picks, Insider Monkey has determined various investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Stanley Druckenmiller of Duquesne Capital

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Do Hedge Funds Think LIN Is A Good Stock To Buy Now?

At the end of December, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards LIN over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

More specifically, Ako Capital was the largest shareholder of Linde plc (NYSE:LIN), with a stake worth $965 million reported as of the end of December. Trailing Ako Capital was Egerton Capital Limited, which amassed a stake valued at $755.7 million. Impax Asset Management, Diamond Hill Capital, and Holocene 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 Ako Capital allocated the biggest weight to Linde plc (NYSE:LIN), around 12.44% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 6.11 percent of its 13F equity portfolio to LIN.

Due to the fact that Linde plc (NYSE:LIN) has experienced declining sentiment from the smart money, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings in the fourth quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest position of the 750 funds tracked by Insider Monkey, valued at an estimated $28.1 million in stock. Guy Shahar’s fund, DSAM Partners, also dumped its stock, about $19.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 10 funds in the fourth quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Linde plc (NYSE:LIN) but similarly valued. We will take a look at Shopify Inc (NYSE:SHOP), Anheuser-Busch InBev SA/NV (NYSE:BUD), JD.Com Inc (NASDAQ:JD), Royal Dutch Shell plc (NYSE:RDS), Amgen, Inc. (NASDAQ:AMGN), BHP Group (NYSE:BBL), and HDFC Bank Limited (NYSE:HDB). All of these stocks’ market caps match LIN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $4267 million. That figure was $3951 million in LIN’s case. Shopify Inc (NYSE:SHOP) 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. Linde plc (NYSE:LIN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LIN is 42.2. 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 positive signal but 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 beat the market again by 1.6 percentage points. Unfortunately LIN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LIN were disappointed as the stock returned 8.9% 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 many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.