The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Intuit Inc. (NASDAQ:INTU) based on those filings.
Hedge fund interest in Intuit Inc. (NASDAQ:INTU) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as S&P Global Inc. (NYSE:SPGI), Prologis Inc (NYSE:PLD), and Duke Energy Corporation (NYSE:DUK) to gather more data points. Our calculations also showed that INTU isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the key hedge fund action surrounding Intuit Inc. (NASDAQ:INTU).
How are hedge funds trading Intuit Inc. (NASDAQ:INTU)?
At Q1’s end, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INTU over the last 18 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Intuit Inc. (NASDAQ:INTU), with a stake worth $381.5 million reported as of the end of September. Trailing AQR Capital Management was GQG Partners, which amassed a stake valued at $294.3 million. Arrowstreet Capital, GLG Partners, and Citadel Investment Group 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 5.85% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, dishing out 5.06 percent of its 13F equity portfolio to INTU.
Because Intuit Inc. (NASDAQ:INTU) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds who sold off their positions entirely heading into Q4. Interestingly, Philippe Laffont’s Coatue Management dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $22.9 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $10.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Intuit Inc. (NASDAQ:INTU) but similarly valued. We will take a look at S&P Global Inc. (NYSE:SPGI), Prologis Inc (NYSE:PLD), Duke Energy Corporation (NYSE:DUK), and JD.Com Inc (NASDAQ:JD). This group of stocks’ market values match INTU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPGI | 73 | 2586131 | -3 |
| PLD | 40 | 450612 | 5 |
| DUK | 35 | 1573551 | -2 |
| JD | 90 | 7919916 | 27 |
| Average | 59.5 | 3132553 | 6.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59.5 hedge funds with bullish positions and the average amount invested in these stocks was $3133 million. That figure was $1557 million in INTU’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 35 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the least popular stock in this group but hedge fund interest is still below average. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on INTU as the stock returned 25.3% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
