With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Aon plc (NYSE:AON).
Aon plc (NYSE:AON) has seen an increase in hedge fund interest recently. Aon plc (NYSE:AON) was in 72 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 63. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AON 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.
Ole Andreas Halvorsen of Viking Global
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Do Hedge Funds Think AON Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 72 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. By comparison, 47 hedge funds held shares or bullish call options in AON a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the number one position in Aon plc (NYSE:AON). Eagle Capital Management has a $1.5186 billion position in the stock, comprising 4.7% of its 13F portfolio. Sitting at the No. 2 spot is Berkshire Hathaway, led by Warren Buffett, holding a $942.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism contain Farallon Capital, Andreas Halvorsen’s Viking Global and Tim Hurd and Ed Magnus’s BlueSpruce Investments. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Aon plc (NYSE:AON), around 11.49% of its 13F portfolio. LFL Advisers is also relatively very bullish on the stock, earmarking 8.84 percent of its 13F equity portfolio to AON.
With a general bullishness amongst the heavyweights, some big names have jumped into Aon plc (NYSE:AON) headfirst. Berkshire Hathaway, managed by Warren Buffett, assembled the most valuable position in Aon plc (NYSE:AON). Berkshire Hathaway had $942.6 million invested in the company at the end of the quarter. David Blood and Al Gore’s Generation Investment Management also initiated a $124 million position during the quarter. The other funds with new positions in the stock are Barry Lebovits and Joshua Kuntz’s Rivulet Capital, Tom Purcell and Marco Tablada’s Alua Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks similar to Aon plc (NYSE:AON). These stocks are Koninklijke Philips NV (NYSE:PHG), General Dynamics Corporation (NYSE:GD), Spotify Technology S.A. (NYSE:SPOT), KLA Corporation (NASDAQ:KLAC), Twitter Inc (NYSE:TWTR), Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and Canadian Pacific Railway Limited (NYSE:CP). This group of stocks’ market caps resemble AON’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PHG | 11 | 104193 | 3 |
| GD | 31 | 5931757 | -9 |
| SPOT | 46 | 2991078 | -2 |
| KLAC | 40 | 1204040 | 4 |
| TWTR | 107 | 4534754 | 29 |
| REGN | 39 | 1308238 | -7 |
| CP | 33 | 5908185 | 9 |
| Average | 43.9 | 3140321 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.9 hedge funds with bullish positions and the average amount invested in these stocks was $3140 million. That figure was $7768 million in AON’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Aon plc (NYSE:AON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AON is 71.8. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on AON as the stock returned 8.9% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
