Hedge Funds Are Betting On Ingersoll-Rand PLC (IR)

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Ingersoll-Rand PLC (NYSE:IR).

Is Ingersoll-Rand PLC (NYSE:IR) worth your attention right now? Money managers are in a bullish mood. The number of bullish hedge fund positions inched up by 5 recently. IR was in 42 hedge funds’ portfolios at the end of the third quarter of 2015. There were 37 hedge funds in our database with IR holdings at the end of the previous quarter. At the end of this article we will also compare IR to other stocks, including Parker-Hannifin Corporation (NYSE:PH), Mohawk Industries, Inc. (NYSE:MHK), and Invesco Ltd. (NYSE:IVZ) to get a better sense of its popularity.

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If you’d ask most investors, hedge funds are viewed as worthless, old financial tools of the past. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the upper echelon of this club, approximately 700 funds. These hedge fund managers shepherd bulk of the hedge fund industry’s total asset base, and by keeping an eye on their top investments, Insider Monkey has unsheathed numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, we’re going to check out the fresh action regarding Ingersoll-Rand PLC (NYSE:IR).

Hedge fund activity in Ingersoll-Rand PLC (NYSE:IR)

Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 14% from the second quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the largest position in Ingersoll-Rand PLC (NYSE:IR). According to its latest quarterly filing, the fund has a $412.9 million position in the stock, comprising 6% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $225.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Nelson Peltz’s Trian Partners, Israel Englander’s Millennium Management and Robert Polak’s Anchor Bolt Capital.

As one would reasonably expect, some big names have jumped into Ingersoll-Rand PLC (NYSE:IR) headfirst. Appaloosa Management LP, managed by David Tepper, initiated the most outsized position in Ingersoll-Rand PLC (NYSE:IR). The fund reportedly had $35 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $31.3 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ingersoll-Rand PLC (NYSE:IR) but similarly valued. We will take a look at Parker-Hannifin Corporation (NYSE:PH), Mohawk Industries, Inc. (NYSE:MHK), Invesco Ltd. (NYSE:IVZ), and SBA Communications Corporation (NASDAQ:SBAC). This group of stocks’ market caps are similar to IR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PH 25 847557 5
MHK 64 2866628 5
IVZ 38 691373 0
SBAC 49 1906259 4

As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $1.58 billion. That figure was $1.44 billion in IR’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Parker-Hannifin Corporation (NYSE:PH) is the least popular one with only 25 bullish hedge fund positions. Ingersoll-Rand PLC (NYSE:IR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MHK might be a better candidate to consider a long position.