5 Capital Goods Stocks Hedge Funds Were Dumping in Q3

Capital Goods stocks have experienced a great November after Donald Trump’s victory sparked a rally in the entire sector. Most stocks spiked on the back of the promise of higher infrastructure spending. Defence manufacturers also saw higher stock prices as the new Republican administration is expected to increase the spending on the country’s defence. Some capital goods stocks saw heavy selling by prominent hedge funds during the third quarter and these funds must be regretting their decision now, as many of the same stocks are currently trading at their yearly highs. In this article, we look at 5 capital good stocks that saw significant dumping by hedge funds.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Steve Cohen’s Point72 Asset Management was the largest seller of Roper Technologies Inc. (NYSE:ROP) during third quarter, as the fund reduced its portfolio holding of the stock from 0.57% to just 0.08%. In addition, Gotham Asset Management, Renaissance Technologies, Janus Capital and Everpoint Asset Management were some of the other hedge funds which reduced Roper Technologies Inc. (NYSE:ROP) holding in the third quarter. Roper Technologies Inc. (NYSE:ROP) has seen its stock price decline by around 2% over the last one year, though it has seen its performance increase with the rest of the capital goods sector over the last one month. This industrial technology company is expected to see full year earnings stagnate to $6.55  a share as per analyst estimates. Most analysts have rated this stock as a buy or a hold. The company management recently said that it would buy ConstructConnect, which is a major provider of cloud-based services to the construction industry for $632 million. The number of hedge funds from our database having this stock in their portfolios declined significantly by 12 to 18 in the third quarter.