With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Eaton Corporation, PLC Ordinary Shares (NYSE:ETN).
Eaton Corp plc (NYSE:ETN) shareholders have witnessed a decrease in hedge fund interest lately. ETN was in 41 hedge funds’ portfolios at the end of September. There were 46 hedge funds in our database with ETN positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sempra Energy (NYSE:SRE), PPG Industries, Inc. (NYSE:PPG), and McGraw Hill Financial Inc (NYSE:MHFI) to gather more data points.
Follow Eaton Corp Plc (NYSE:ETN)
Follow Eaton Corp Plc (NYSE:ETN)
In today’s marketplace there are dozens of indicators shareholders have at their disposal to analyze stocks. Some of the most under-the-radar indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can outperform their index-focused peers by a very impressive amount (see the details here).
Now, we’re going to take a look at the fresh action encompassing Eaton Corp plc (NYSE:ETN).
What have hedge funds been doing with Eaton Corp plc (NYSE:ETN)?
At the end of the third quarter, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the most valuable position in Eaton Corp plc (NYSE:ETN). Viking Global has a $209 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is John A. Levin of Levin Capital Strategies, with a $176.6 million position; 3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise Thomas Steyer’s Farallon Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group.
Due to the fact that Eaton Corp plc (NYSE:ETN) has witnessed a declination in interest from hedge fund managers, logic holds that there is a sect of hedgies who sold off their entire stakes by the end of the third quarter. Interestingly, Rob Citrone’s Discovery Capital Management dumped the largest investment of all the hedgies monitored by Insider Monkey, worth about $46.8 million in stock. Barry Rosenstein’s fund, JANA Partners, also said goodbye to its stock, about $37.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 5 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Eaton Corp plc (NYSE:ETN) but similarly valued. We will take a look at Sempra Energy (NYSE:SRE), PPG Industries, Inc. (NYSE:PPG), McGraw Hill Financial Inc (NYSE:MHFI), and Kellogg Company (NYSE:K). This group of stocks’ market valuations resemble ETN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRE | 28 | 968933 | -5 |
| PPG | 51 | 1624847 | 5 |
| MHFI | 56 | 2584172 | 5 |
| K | 30 | 778773 | 8 |
As you can see these stocks had an average of 41.25 hedge funds with bullish positions and the average amount invested in these stocks was $1,489 million. That figure was $985 million in ETN’s case. McGraw Hill Financial Inc (NYSE:MHFI) is the most popular stock in this table. On the other hand Sempra Energy (NYSE:SRE) is the least popular one with only 28 bullish hedge fund positions. Eaton Corp plc (NYSE:ETN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MHFI might be a better candidate to consider a long position.
