Do Hedge Funds Love Caterpillar Inc. (NYSE:CAT)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Caterpillar Inc. (NYSE:CAT) in this article.

Caterpillar Inc. (NYSE:CAT) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that CAT isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ large-cap stock picks indeed failed to the beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Let’s view the recent hedge fund action surrounding Caterpillar Inc. (NYSE:CAT).

How have hedgies been trading Caterpillar Inc. (NYSE:CAT)?

At Q3’s end, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. By comparison, 51 hedge funds held shares or bullish call options in CAT heading into this year. Overall, hedge funds have been getting bullish about CAT. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


The largest stake in Caterpillar Inc. (NYSE:CAT) was held by Bill & Melinda Gates Foundation Trust, which reported holding $1717.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $266.9 million position. Other investors bullish on the company included Impala Asset Management, Adage Capital Management, and AQR Capital Management.

As industrywide interest jumped, specific money managers have been driving this bullishness. Suvretta Capital Management, managed by Aaron Cowen, established the most outsized position in Caterpillar Inc. (NYSE:CAT). Suvretta Capital Management had $193.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $106.7 million position during the quarter. The other funds with brand new CAT positions are Clint Murray’s Lodge Hill Capital, Bain Capital’s Brookside Capital, and Zach Schreiber’s Point State Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Caterpillar Inc. (NYSE:CAT) but similarly valued. These stocks are ConocoPhillips (NYSE:COP), Rio Tinto plc (NYSE:RIO), Diageo plc (NYSE:DEO), and U.S. Bancorp (NYSE:USB). All of these stocks’ market caps are closest to CAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COP 55 2157126 8
RIO 20 944618 0
DEO 15 965351 0
USB 39 7393172 9

As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $2865 million. That figure was $4029 million in CAT’s case. ConocoPhillips (NYSE:COP) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Caterpillar Inc. (NYSE:CAT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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