In this article we will check out the progression of hedge fund sentiment towards Amphenol Corporation (NYSE:APH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Amphenol Corporation (NYSE:APH) investors should be aware of an increase in hedge fund sentiment recently. Amphenol Corporation (NYSE:APH) was in 42 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 49. There were 41 hedge funds in our database with APH positions at the end of the fourth quarter. Our calculations also showed that APH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the recent hedge fund action encompassing Amphenol Corporation (NYSE:APH).
Do Hedge Funds Think APH Is A Good Stock To Buy Now?
At Q1’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in APH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in Amphenol Corporation (NYSE:APH), which was worth $603 million at the end of the fourth quarter. On the second spot was Woodline Partners which amassed $111.7 million worth of shares. Arrowstreet Capital, AQR Capital Management, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ayrshire Capital Management allocated the biggest weight to Amphenol Corporation (NYSE:APH), around 3.49% of its 13F portfolio. Fundsmith Long/Short Fund is also relatively very bullish on the stock, earmarking 3.24 percent of its 13F equity portfolio to APH.
Now, specific money managers were leading the bulls’ herd. Renaissance Technologies, assembled the largest position in Amphenol Corporation (NYSE:APH). Renaissance Technologies had $21.7 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $5.1 million position during the quarter. The following funds were also among the new APH investors: Peter Avellone’s Cartenna Capital, Robert Karr’s Joho Capital, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Amphenol Corporation (NYSE:APH) but similarly valued. We will take a look at Trane Technologies plc (NYSE:TT), T. Rowe Price Group, Inc. (NASDAQ:TROW), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), Agilent Technologies Inc. (NYSE:A), Ferrari N.V. (NYSE:RACE), and Cadence Design Systems Inc (NASDAQ:CDNS). This group of stocks’ market caps resemble APH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TT | 35 | 1092597 | 1 |
| TROW | 26 | 303927 | -9 |
| EA | 44 | 1430436 | -6 |
| STZ | 58 | 1231651 | 0 |
| A | 42 | 3464139 | -3 |
| RACE | 26 | 1257227 | -3 |
| CDNS | 30 | 1490527 | -2 |
| Average | 37.3 | 1467215 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1467 million. That figure was $1077 million in APH’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 26 bullish hedge fund positions. Amphenol Corporation (NYSE:APH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APH is 56.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately APH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on APH were disappointed as the stock returned 0.5% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Amphenol Corp (NYSE:APH)
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Disclosure: None. This article was originally published at Insider Monkey.
