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Did Hedge Funds Make The Right Call On Agilent Technologies Inc. (A) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Agilent Technologies Inc. (NYSE:A) based on that data and determine whether they were really smart about the stock.

Agilent Technologies Inc. (NYSE:A) has seen a decrease in enthusiasm from smart money recently. Our calculations also showed that A isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s check out the key hedge fund action regarding Agilent Technologies Inc. (NYSE:A).

How have hedgies been trading Agilent Technologies Inc. (NYSE:A)?

At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards A over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is A A Good Stock To Buy?

Among these funds, Pershing Square held the most valuable stake in Agilent Technologies Inc. (NYSE:A), which was worth $904.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $350.3 million worth of shares. Cantillon Capital Management, Impax Asset Management, and Viking Global 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 Clearfield Capital allocated the biggest weight to Agilent Technologies Inc. (NYSE:A), around 15.25% of its 13F portfolio. Pershing Square is also relatively very bullish on the stock, designating 13.76 percent of its 13F equity portfolio to A.

Due to the fact that Agilent Technologies Inc. (NYSE:A) has faced bearish sentiment from the smart money, we can see that there was a specific group of hedgies that decided to sell off their full holdings by the end of the first quarter. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $56.7 million in stock. Seth Rosen’s fund, Nitorum Capital, also sold off its stock, about $37.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 11 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks similar to Agilent Technologies Inc. (NYSE:A). These stocks are Willis Towers Watson Public Limited Company (NASDAQ:WLTW), McKesson Corporation (NYSE:MCK), Sirius XM Holdings Inc (NASDAQ:SIRI), and Southern Copper Corporation (NYSE:SCCO). All of these stocks’ market caps are similar to A’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WLTW 43 1654147 8
MCK 63 2073564 12
SIRI 36 1134756 5
SCCO 19 134406 -1
Average 40.25 1249218 6

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $1249 million. That figure was $2668 million in A’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Southern Copper Corporation (NYSE:SCCO) is the least popular one with only 19 bullish hedge fund positions. Agilent Technologies Inc. (NYSE:A) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on A, though not to the same extent, as the stock returned 23.6% during the second quarter and outperformed the market.

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Disclosure: None. This article was originally published at Insider Monkey.