In this article we will check out the progression of hedge fund sentiment towards Roper Technologies Inc. (NYSE:ROP) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Roper Technologies Inc. (NYSE:ROP) ready to rally soon? The best stock pickers were becoming hopeful. The number of bullish hedge fund positions moved up by 7 in recent months. Roper Technologies Inc. (NYSE:ROP) was in 45 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ROP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 38 hedge funds in our database with ROP holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are perceived as worthless, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, Our experts look at the masters of this club, about 850 funds. These investment experts orchestrate bulk of the smart money’s total capital, and by monitoring their highest performing picks, Insider Monkey has brought to light a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to review the recent hedge fund action surrounding Roper Technologies Inc. (NYSE:ROP).
How have hedgies been trading Roper Technologies Inc. (NYSE:ROP)?
Heading into the third quarter of 2020, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the first quarter of 2020. By comparison, 35 hedge funds held shares or bullish call options in ROP a year ago. So, let’s check out 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 $673.5 million reported as of the end of September. Trailing Akre Capital Management was Millennium Management, which amassed a stake valued at $55.4 million. Bristol Gate Capital Partners, Echo Street Capital Management, and Alyeska Investment Group 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 16.09% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, dishing out 5.07 percent of its 13F equity portfolio to ROP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Renaissance Technologies, founded by Jim Simons, assembled the largest position in Roper Technologies Inc. (NYSE:ROP). Renaissance Technologies had $30.7 million invested in the company at the end of the quarter. Ric Dillon’s Diamond Hill Capital also made a $30.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Thomas Rigo’s Bishop Rock Capital, Phill Gross and Robert Atchinson’s Adage Capital Management, and Qing Li’s Sciencast Management.
Let’s go over hedge fund activity in other stocks similar to Roper Technologies Inc. (NYSE:ROP). These stocks are TAL Education Group (NYSE:TAL), TC Energy Corporation (NYSE:TRP), Banco Santander, S.A. (NYSE:SAN), Keurig Dr Pepper Inc. (NASDAQ:KDP), Enterprise Products Partners L.P. (NYSE:EPD), Prudential Public Limited Company (NYSE:PUK), and American Electric Power Company, Inc. (NASDAQ:AEP). This group of stocks’ market values are closest to ROP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TAL | 40 | 2367131 | 2 |
| TRP | 21 | 255710 | -3 |
| SAN | 16 | 351399 | -2 |
| KDP | 29 | 725935 | -1 |
| EPD | 30 | 222209 | 4 |
| PUK | 5 | 9403 | -1 |
| AEP | 34 | 753751 | -4 |
| Average | 25 | 669363 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $669 million. That figure was $1102 million in ROP’s case. TAL Education Group (NYSE:TAL) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Roper Technologies Inc. (NYSE:ROP) is more popular among hedge funds. Our overall hedge fund sentiment score for ROP is 90. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Unfortunately ROP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ROP were disappointed as the stock returned 10.7% since the end of the second quarter (through 10/23) 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.
