Did The Smart Money Get Teledyne Technologies Incorporated (TDY) Right?

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 third 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 6 years and analyze what the smart money thinks of Teledyne Technologies Incorporated (NYSE:TDY) based on that data and determine whether they were really smart about the stock.

Teledyne Technologies Incorporated (NYSE:TDY) has experienced an increase in hedge fund sentiment recently. Teledyne Technologies Incorporated (NYSE:TDY) was in 38 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 36 hedge funds in our database with TDY holdings at the end of June. Our calculations also showed that TDY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a peek at the fresh hedge fund action encompassing Teledyne Technologies Incorporated (NYSE:TDY).

Do Hedge Funds Think TDY Is A Good Stock To Buy Now?

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TDY over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in Teledyne Technologies Incorporated (NYSE:TDY) was held by Select Equity Group, which reported holding $808.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $136.9 million position. Other investors bullish on the company included Millennium Management, Fisher Asset Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position 11 Capital Partners allocated the biggest weight to Teledyne Technologies Incorporated (NYSE:TDY), around 4.42% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, dishing out 2.72 percent of its 13F equity portfolio to TDY.

As one would reasonably expect, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in Teledyne Technologies Incorporated (NYSE:TDY). Balyasny Asset Management had $34.6 million invested in the company at the end of the quarter. Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management also initiated a $15 million position during the quarter. The other funds with brand new TDY positions are Andrew Sandler’s Sandler Capital Management, Blair Baker’s Precept Capital Management, and Renee Yao’s Neo Ivy Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Teledyne Technologies Incorporated (NYSE:TDY) but similarly valued. We will take a look at Citizens Financial Group Inc (NYSE:CFG), Entergy Corporation (NYSE:ETR), RingCentral Inc (NYSE:RNG), Darden Restaurants, Inc. (NYSE:DRI), ON Semiconductor Corporation (NASDAQ:ON), Cheniere Energy Partners LP (NYSE:CQP), and Ulta Beauty, Inc. (NASDAQ:ULTA). This group of stocks’ market values match TDY’s market value.

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As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $869 million. That figure was $1703 million in TDY’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. Teledyne Technologies Incorporated (NYSE:TDY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TDY is 75.9. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, TDY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TDY were disappointed as the stock returned -1.9% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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