United Technologies Corporation (NYSE:UTX) has seen a boost in analyst outlook from Bernstein this morning, and interestingly, it was in 46 hedge funds’ portfolio at the end of the fourth quarter of 2012. UTX has experienced an increase in hedge fund sentiment lately. There were 44 hedge funds in our database with UTX holdings at the end of the previous quarter.
To most market participants, hedge funds are seen as slow, outdated financial vehicles of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey choose to focus on the upper echelon of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by keeping an eye on their top equity investments, we have determined a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as beneficial, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are many reasons for an insider to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).
Keeping this in mind, we’re going to take a peek at the latest action encompassing United Technologies Corporation (NYSE:UTX).
How are hedge funds trading United Technologies Corporation (NYSE:UTX)?
At year’s end, a total of 46 of the hedge funds we track held long positions in this stock, a change of 5% from the third quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in United Technologies Corporation (NYSE:UTX). Fisher Asset Management has a $466 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Ric Dillon of Diamond Hill Capital, with a $254 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Lee Ainslie’s Maverick Capital and Bill Miller’s Legg Mason Capital Management.
As one would reasonably expect, key money managers have jumped into United Technologies Corporation (NYSE:UTX) headfirst. Ascend Capital, managed by Malcolm Fairbairn, assembled the most outsized position in United Technologies Corporation (NYSE:UTX). Ascend Capital had 38 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $26 million investment in the stock during the quarter. The following funds were also among the new UTX investors: Dmitry Balyasny’s Balyasny Asset Management, Stephen J. Errico’s Locust Wood Capital Advisers, and Louis Bacon’s Moore Global Investments.
What have insiders been doing with United Technologies Corporation (NYSE:UTX)?
Bullish insider trading is most useful when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, United Technologies Corporation (NYSE:UTX) has seen zero unique insiders buying, and 15 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to United Technologies Corporation (NYSE:UTX). These stocks are TransDigm Group Incorporated (NYSE:TDG), Rockwell Collins, Inc. (NYSE:COL), General Dynamics Corporation (NYSE:GD), Lockheed Martin Corporation (NYSE:LMT), and The Boeing Company (NYSE:BA). All of these stocks are in the aerospace/defense products & services industry and their market caps are closest to UTX’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|TransDigm Group Incorporated (NYSE:TDG)||31||1||7|
|Rockwell Collins, Inc. (NYSE:COL)||16||0||11|
|General Dynamics Corporation (NYSE:GD)||37||1||0|
|Lockheed Martin Corporation (NYSE:LMT)||34||0||3|
|The Boeing Company (NYSE:BA)||41||0||1|
With the results demonstrated by Insider Monkey’s research, everyday investors should always watch hedge fund and insider trading activity, and United Technologies Corporation (NYSE:UTX) is an important part of this process.