Intuit Inc. (NASDAQ:INTU)’s shares have lost some ground today after the company reported fiscal third quarter earnings. For the quarter, Intuit reported EPS of $3.43 versus estimates of $3.21 per share, while revenue rose by 5.5% year-over-year to $2.3 billion. The company also increased full year revenue to $4.66-$4.68 billion from the previous $4.61 billion. Adjusted EPS is seen to be $3.63-$3.65 versus the expected $3.51. Shares could be down on profit taking. Intuit shares were up by almost 12% year-to-date before its earnings report. However, among hedge funds, the stock is not very popular and saw a decrease in the number of supporters during the first quarter.
The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 750 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Intuit Inc. (NASDAQ:INTU) based on those filings.
Intuit Inc. (NASDAQ:INTU) was in 21 hedge funds’ portfolios at the end of the first quarter of 2016. INTU investors should pay attention to a decrease in enthusiasm from smart money recently. There were 25 hedge funds in our database with INTU holdings 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 O’Reilly Automotive Inc (NASDAQ:ORLY), AFLAC Incorporated (NYSE:AFL), and SYSCO Corporation (NYSE:SYY) to gather more data points.
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If you’d ask most stock holders, hedge funds are seen as unimportant, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, Our researchers choose to focus on the top tier of this club, about 700 funds. These hedge fund managers have their hands on the lion’s share of the hedge fund industry’s total capital, and by watching their finest investments, Insider Monkey has uncovered several investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Intuit Inc. (NASDAQ:INTU). Citadel Investment Group has a $246.7 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is David Blood and Al Gore of Generation Investment Management, with a $118.7 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management.
On the next page, we are going to take a look at some funds that chose to dump their stakes in Intuit during the first quarter.
Judging by the fact that Intuit Inc. (NASDAQ:INTU) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds who sold off their positions entirely by the end of the first quarter. At the top of the heap, David E. Shaw’s D E Shaw cut the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $35.7 million in stock, and Robert Pitts’s Steadfast Capital Management was right behind this move, as the fund dumped about $29.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). We will take a look at O’Reilly Automotive Inc (NASDAQ:ORLY), AFLAC Incorporated (NYSE:AFL), SYSCO Corporation (NYSE:SYY), and Waste Management, Inc. (NYSE:WM). This group of stocks’ market values match INTU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORLY | 42 | 923759 | 0 |
| AFL | 28 | 515799 | 4 |
| SYY | 26 | 3696340 | 4 |
| WM | 28 | 1569501 | -1 |
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1676 million. That figure was $719 million in INTU’s case. O’Reilly Automotive Inc (NASDAQ:ORLY) is the most popular stock in this table. On the other hand SYSCO Corporation (NYSE:SYY) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Intuit Inc. (NASDAQ:INTU) is even less popular than SYY. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
