Honeywell International Inc. (HON), The Boeing Company (BA): Windy City Hedge Fund’s Top Plays for 2013

Page 1 of 2

Hedge funds are always an important indicator for individual investors to follow, and this is something we harp on here at Insider Monkey. While most believe that the smart money’s methods are old and underwhelming, research actually finds that the best picks of the best money managers have potential. Our small-cap strategy beat the market by 18% a year for more than a decade in our back tests, and since we started sharing this strategy with the public, it has returned another 18% in just 5 months (learn how to use this yourself).

Since funds’ fourth quarter 13F filings began trickling in a few weeks ago, we’ve already covered close to 100 of the world’s largest money managers, but we haven’t taken a look at Anand Parekh’s Alyeska Investment Group yet. Managing close to $2.5-$3.0 billion in assets, Alyeska is a Chicago-based hedge fund that follows a market neutral strategy, taking both long and short positions. In preparation for 2013, Parekh and Alyeska were making several notable moves; let’s take a look at his top five holdings.

Honeywell International Inc. (NYSE:HON)

Honeywell International Inc. (NYSE:HON) has been a top five pick for Parekh and Alyeska since the third quarter of last year, and the diversified technology manufacturer now sits in the fund’s No. 1 spot. The sheer variety of Honeywell’s business segments—transportation systems, aerospace, automation and control, and performance tech—is a key point of this company’s bullish thesis, and margins have generally been trending upwards over the past couple years.

Trading below 13 times earnings and a moderate PEG of 1.8, shares of Honeywell International Inc. (NYSE:HON) aren’t particularly expensive at the moment, and offer a solid dividend yield of 2.3% to boot. Mario Gabelli’s Gamco Investors and Cliff Asness’ AQR Capital Management (see Asness’ newest stock picks) join Parekh in this stock, which is very good company to have.

Hubbell Incorporated (NYSE:HUB.B), meanwhile, is another tech stock in Parekh’s equity portfolio, holding the No. 2 spot. The hedge fund manager downsized his position in Hubbell by 7% last quarter, but it still comprises 2.5% of his total 13F-reportable assets—one of only three stocks to hold this distinction in Parekh’s equity portfolio. Generally speaking, this electronic instruments company has been a splendid investment since the beginning of the fourth quarter, returning 15.3%.

Despite the appreciation, Wall Street’s average price target represents a 4% upside for Hubbell shares from their current level, and the most bullish analysts think this upside can stretch to 12%. It’s easy to see that Parekh and Alyeska most likely lie in this latter group, and it’s worth noting that aggregate hedge fund interest did increase by 5% in Q4 (of the 450 top-tier funds we track).

Capital One Financial Corp. (NYSE:COF), sitting in third, saw Parekh cut his position by 17% last quarter, though the financial services giant still holds a lofty spot in his portfolio. Mr. Market has not treated Capital One very nicely since the start of 2013, as its shares have dropped almost 12% year-to-date. While Parekh obviously didn’t sell his position entirely, some managers who did include John Overdeck and David Siegel’s Two Sigma Advisors, and Clint Carlson’s Carlson Capital. On the whole, hedge fund interest in Capital One fell by 8% last quarter.

Now, with this selloff, shares trade at major discounts across the board, and on average, the sell-side expects annual EPS growth to accelerate at a rate of 8-9% a year through at least 2017. There are obviously two sides to every story, but it’s important that value and growth-hunting investors at least consider the smart money’s sentiment.

Eaton Corporation (NYSE:ETN) and The Boeing Company (NYSE:BA) round out this top five, and each received a major vote of confidence from Parekh and Alyeska last quarter. The hedge fund upped its stake in The Boeing Company (NYSE:BA) by 14% and established a new position in Eaton.

Why was this the case?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!