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Do Hedge Funds Still Love Intuit Inc. (INTU)?

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 second 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 5 years and analyze what the smart money thinks of Intuit Inc. (NASDAQ:INTU) based on that data and determine whether they were really smart about the stock.

Intuit Inc. (NASDAQ:INTU) was in 53 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 55. INTU investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 54 hedge funds in our database with INTU holdings at the end of March. Our calculations also showed that INTU isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Rajiv Jain of GQG Partners

Rajiv Jain of GQG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s view the recent hedge fund action surrounding Intuit Inc. (NASDAQ:INTU).

Hedge fund activity in Intuit Inc. (NASDAQ:INTU)

At second quarter’s end, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. By comparison, 46 hedge funds held shares or bullish call options in INTU a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, AQR Capital Management was the largest shareholder of Intuit Inc. (NASDAQ:INTU), with a stake worth $380.4 million reported as of the end of September. Trailing AQR Capital Management was GQG Partners, which amassed a stake valued at $235.3 million. GLG Partners, Arrowstreet Capital, and Echo Street 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 Blue Whale Capital allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 6.18% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, earmarking 4.58 percent of its 13F equity portfolio to INTU.

Since Intuit Inc. (NASDAQ:INTU) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that decided to sell off their entire stakes by the end of the second quarter. Intriguingly, Robert Joseph Caruso’s Select Equity Group dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising about $33.7 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dropped about $18.3 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds by the end of the second quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). We will take a look at ServiceNow Inc (NYSE:NOW), American Express Company (NYSE:AXP), Morgan Stanley (NYSE:MS), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Mondelez International Inc (NASDAQ:MDLZ), and Altria Group Inc (NYSE:MO). This group of stocks’ market caps are closest to INTU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NOW 86 4949673 1
AXP 54 17635296 -3
MS 61 4357171 -9
VRTX 54 3477688 -2
KOF 5 358015 -2
MDLZ 54 2594722 0
MO 43 1289543 -3
Average 51 4951730 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $4952 million. That figure was $1735 million in INTU’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 5 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INTU is 62.5. 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 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 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on INTU, though not to the same extent, as the stock returned 16.8% since the end of June and outperformed the market as well.

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