Where Do Hedge Funds Stand On Raytheon Technologies Corp (RTX)?

In this article we will check out the progression of hedge fund sentiment towards Raytheon Technologies Corp (NYSE:RTX) 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 Raytheon Technologies Corp (NYSE:RTX) a healthy stock for your portfolio? Hedge funds were in a bearish mood. The number of bullish hedge fund positions were trimmed by 1 recently. Raytheon Technologies Corp (NYSE:RTX) was in 58 hedge funds’ portfolios at the end of March. The all time high for this statistic is 81. Our calculations also showed that RTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Eric Mandelblatt of Soroban Capital Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. 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. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Raytheon Technologies Corp (NYSE:RTX).

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

At the end of the first quarter, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in RTX over the last 23 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Raytheon Technologies Corp (NYSE:RTX), with a stake worth $482.9 million reported as of the end of March. Trailing Fisher Asset Management was Farallon Capital, which amassed a stake valued at $369.5 million. Soroban Capital Partners, Alkeon Capital Management, and D E Shaw 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 Albar Capital allocated the biggest weight to Raytheon Technologies Corp (NYSE:RTX), around 8.05% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, earmarking 6.15 percent of its 13F equity portfolio to RTX.

Since Raytheon Technologies Corp (NYSE:RTX) has witnessed declining sentiment from the smart money, it’s easy to see that there were a few hedge funds that slashed their positions entirely heading into Q2. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $76.6 million in stock, and Nehal Chopra’s Ratan Capital Group was right behind this move, as the fund said goodbye to about $10.1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q2.

Let’s now review hedge fund activity in other stocks similar to Raytheon Technologies Corp (NYSE:RTX). These stocks are Sea Limited (NYSE:SE), General Electric Company (NYSE:GE), BlackRock, Inc. (NYSE:BLK), American Express Company (NYSE:AXP), PetroChina Company Limited (NYSE:PTR), Airbnb, Inc. (NASDAQ:ABNB), and The Goldman Sachs Group, Inc. (NYSE:GS). All of these stocks’ market caps match RTX’s market cap.

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As you can see these stocks had an average of 56.9 hedge funds with bullish positions and the average amount invested in these stocks was $7164 million. That figure was $2497 million in RTX’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 bullish hedge fund positions. Raytheon Technologies Corp (NYSE:RTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RTX is 53.3. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on RTX as the stock returned 15.6% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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