Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is Rockwell Automation (NYSE:ROK) a buy right now? Investors who are in the know are taking a bearish view. The number of bullish hedge fund positions retreated by 3 recently. At the end of this article we will also compare ROK to other stocks including Essex Property Trust Inc (NYSE:ESS), Ameriprise Financial, Inc. (NYSE:AMP), and FirstEnergy Corp. (NYSE:FE) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s take a peek at the recent action regarding Rockwell Automation (NYSE:ROK).
What have hedge funds been doing with Rockwell Automation (NYSE:ROK)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 10% drop from the second quarter of 2016. Hedge fund ownership of the stock has generally trended down over the past year, save for a mild uptick in Q1. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the largest position in Rockwell Automation (NYSE:ROK), worth close to $120.7 million, comprising 1.3% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $49.5 million position. Remaining members of the smart money that hold long positions encompass Mario Gabelli’s GAMCO Investors, Paul Marshall and Ian Wace’s Marshall Wace LLP and Joel Greenblatt’s Gotham Asset Management.