The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Textron Inc. (NYSE:TXT).
Is Textron Inc. (NYSE:TXT) a good investment right now? Hedge funds were reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 2 recently. Textron Inc. (NYSE:TXT) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 32. Our calculations also showed that TXT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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. With all of this in mind let’s take a glance at the key hedge fund action regarding Textron Inc. (NYSE:TXT).
Do Hedge Funds Think TXT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in TXT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of Textron Inc. (NYSE:TXT), with a stake worth $451.1 million reported as of the end of March. Trailing Pzena Investment Management was GAMCO Investors, which amassed a stake valued at $114.4 million. D E Shaw, AQR Capital Management, and Millennium 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 Barington Capital Group allocated the biggest weight to Textron Inc. (NYSE:TXT), around 7.75% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 3.6 percent of its 13F equity portfolio to TXT.
Seeing as Textron Inc. (NYSE:TXT) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds that slashed their entire stakes heading into Q2. At the top of the heap, Javier Velazquez’s Albar Capital dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at close to $8 million in stock, and Renaissance Technologies was right behind this move, as the fund dumped about $6.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to Textron Inc. (NYSE:TXT). We will take a look at Masimo Corporation (NASDAQ:MASI), Teva Pharmaceutical Industries Limited (NYSE:TEVA), InterContinental Hotels Group PLC (NYSE:IHG), XPO Logistics Inc (NYSE:XPO), Snap-on Incorporated (NYSE:SNA), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), and CenterPoint Energy, Inc. (NYSE:CNP). All of these stocks’ market caps match TXT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MASI | 35 | 308604 | 6 |
| TEVA | 24 | 1119017 | -2 |
| IHG | 8 | 19947 | 1 |
| XPO | 40 | 2685320 | 0 |
| SNA | 18 | 431948 | -8 |
| CHRW | 23 | 359592 | -6 |
| CNP | 25 | 370742 | -5 |
| Average | 24.7 | 756453 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $756 million. That figure was $702 million in TXT’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 bullish hedge fund positions. Textron Inc. (NYSE:TXT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TXT is 43. 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. 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on TXT, though not to the same extent, as the stock returned 18.2% since the end of Q1 (through July 16th) and outperformed the market.
Follow Textron Inc (NYSE:TXT)
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Disclosure: None. This article was originally published at Insider Monkey.
