Hedge Funds Are Betting On Trane Technologies plc (TT)

In this article we are going to use hedge fund sentiment as a tool and determine whether Trane Technologies plc (NYSE:TT) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Trane Technologies plc (NYSE:TT) has experienced an increase in hedge fund sentiment of late. Trane Technologies plc (NYSE:TT) was in 35 hedge funds’ portfolios at the end of March. The all time high for this statistic is 40. Our calculations also showed that TT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover 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 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 we’re going to take a peek at the new hedge fund action regarding Trane Technologies plc (NYSE:TT).

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

At the end of March, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. By comparison, 36 hedge funds held shares or bullish call options in TT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

More specifically, Generation Investment Management was the largest shareholder of Trane Technologies plc (NYSE:TT), with a stake worth $348.4 million reported as of the end of March. Trailing Generation Investment Management was Impax Asset Management, which amassed a stake valued at $236.6 million. AQR Capital Management, Holocene Advisors, and Fosse Capital Partners 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 Fosse Capital Partners allocated the biggest weight to Trane Technologies plc (NYSE:TT), around 22.76% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, earmarking 1.46 percent of its 13F equity portfolio to TT.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. MIK Capital, managed by Kamyar Khajavi, assembled the most outsized position in Trane Technologies plc (NYSE:TT). MIK Capital had $3.2 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also initiated a $2.9 million position during the quarter. The other funds with new positions in the stock are Qing Li’s Sciencast Management, Paul Tudor Jones’s Tudor Investment Corp, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s go over hedge fund activity in other stocks similar to Trane Technologies plc (NYSE:TT). These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), Agilent Technologies Inc. (NYSE:A), Ferrari N.V. (NYSE:RACE), Cadence Design Systems Inc (NASDAQ:CDNS), and Schlumberger Limited. (NYSE:SLB). This group of stocks’ market caps match TT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.4 hedge funds with bullish positions and the average amount invested in these stocks was $1474 million. That figure was $1093 million in TT’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 26 bullish hedge fund positions. Trane Technologies plc (NYSE:TT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TT is 46.3. 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 19.3% in 2021 through June 25th and beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on TT, though not to the same extent, as the stock returned 9.1% since the end of Q1 (through June 25th) and outperformed the market.

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