Eaton Corporation plc (ETN): Are Hedge Funds Right About This Stock?

In this article we will analyze whether Eaton Corporation plc (NYSE:ETN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Eaton Corporation plc (NYSE:ETN) an outstanding investment now? The best stock pickers were becoming more confident. The number of bullish hedge fund bets advanced by 6 in recent months. Eaton Corporation plc (NYSE:ETN) was in 41 hedge funds’ portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that ETN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are several signals stock market investors put to use to assess stocks. A duo of the most innovative signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can trounce the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Now let’s take a look at the new hedge fund action regarding Eaton Corporation plc (NYSE:ETN).

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

At Q4’s end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ETN over the last 22 quarters. 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 Eaton Corporation plc (NYSE:ETN) was held by Citadel Investment Group, which reported holding $161.5 million worth of stock at the end of December. It was followed by AQR Capital Management with a $139.6 million position. Other investors bullish on the company included Adage Capital Management, Holocene Advisors, and Lansdowne Partners. In terms of the portfolio weights assigned to each position Socorro Asset Management allocated the biggest weight to Eaton Corporation plc (NYSE:ETN), around 3.42% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 2.82 percent of its 13F equity portfolio to ETN.

As aggregate interest increased, some big names have jumped into Eaton Corporation plc (NYSE:ETN) headfirst. Interval Partners, managed by Gregg Moskowitz, assembled the largest position in Eaton Corporation plc (NYSE:ETN). Interval Partners had $10.4 million invested in the company at the end of the quarter. Mark R. Freeman’s Socorro Asset Management also made a $6.6 million investment in the stock during the quarter. The other funds with brand new ETN positions are Peter Avellone’s Cartenna Capital, Anand Parekh’s Alyeska Investment Group, and Larry Foley and Paul Farrell’s Bronson Point Partners.

Let’s go over hedge fund activity in other stocks similar to Eaton Corporation plc (NYSE:ETN). We will take a look at Relx PLC (NYSE:RELX), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Canadian Pacific Railway Limited (NYSE:CP), Kimberly Clark Corporation (NYSE:KMB), Las Vegas Sands Corp. (NYSE:LVS), Lululemon Athletica inc. (NASDAQ:LULU), and DoorDash, Inc. (NYSE:DASH). This group of stocks’ market values are similar to ETN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RELX 8 136867 2
CRWD 92 7242322 21
CP 24 1540076 -8
KMB 37 1420161 -4
LVS 63 3065977 16
LULU 50 929013 0
DASH 38 3952490 38
Average 44.6 2612415 9.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.6 hedge funds with bullish positions and the average amount invested in these stocks was $2612 million. That figure was $834 million in ETN’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 8 bullish hedge fund positions. Eaton Corporation plc (NYSE:ETN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ETN is 58.9. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ETN as the stock returned 19.6% since the end of the fourth quarter (through 4/30) and outperformed the market by an even larger margin.

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