Intuit Inc. (NTU)’s Drop Supports Underweight Sentiment from Hedge Funds

A closer look at the numbers shows that among the funds we track, the two largest shareholders of Intuit Inc. (NASDAQ:INTU), David Blood and Al Gore‘s Generation Investment Management and Ken Griffin‘s Citadel Investment Group reduced their stakes by 42% and 14% during the second quarter, respectively. Generation reported ownership of 1.90 million shares, the position amassing 2.65% of its equity portfolio, while Citadel’s position of 1.59 million shares accounts for only 0.14% of its portfolio. However, the third largest shareholder, Israel Englander’s Millennium Management boosted its exposure to the company by 1.28 million shares to 1.31 million shares. A similar trend can be noticed among the majority of Intuit’s largest shareholders.

It’s not clear whether Intuit’s decision to divest some of its assets was not foreseen by hedge funds, or if they were betting on the company increasing its shareholder value through these planned transactions. What we can see, however, is the unanimous reaction of analysts, six of whom have lowered their price targets. Among them, the highest target is currently set by Jeffries Group, which reiterated its ‘Buy’ rating with a price target of $115, down from $120. The lowest price target was set by Wedbush, which decreased it to $96 from $97 with a ‘Neutral’ rating. The seventh analyst that issued an update on Intuit today is First Analysis, which downgraded the stock to ‘Underweight’ from ‘Equal Weight’.

Taking into account the market’s negative reaction on Intuit Inc. (NASDAQ:INTU)’s results and divestiture plans, as well as a lower outlook from analysts, it is most likely that hedge funds will follow suit and will reduce their exposure to the company, which is why we don’t recommend buying shares of the stock on today’s dip.

Disclosure: none