Hedge Funds Are Dumping Roper Technologies Inc (ROP)

We know that hedge funds generate strong risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Roper Technologies Inc (NYSE:ROP).

Roper Technologies Inc (NYSE:ROP) shareholders have witnessed a decrease in support from the world’s most successful money managers lately. There were 18 hedge funds in our database with ROP holdings at the end of the last quarter. 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 ArcelorMittal (ADR) (NYSE:MT), Micron Technology, Inc. (NASDAQ:MU), and NetEase, Inc (ADR) (NASDAQ:NTES) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about Roper Technologies Inc (NYSE:ROP)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 40% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards ROP over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Charles Akre’s Akre Capital Management holds the most valuable position in Roper Technologies Inc (NYSE:ROP) which has a $284.8 million position in the stock, comprising 5.5% of its 13F portfolio. On Akre Capital Management’s heels is Ian Simm of Impax Asset Management, with a $58.5 million position; 2.7% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, David Harding’s Winton Capital Management and Ben Gambill’s Tiger Eye Capital. We should note that Impax Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that Roper Technologies Inc (NYSE:ROP) has gone through bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of hedgies that elected to cut their positions entirely in the third quarter. Interestingly, Jim Simons’ Renaissance Technologies, one of the biggest hedge funds in the world, dropped the biggest investment of the 700 funds tracked by Insider Monkey, comprising about $41.4 million in stock, and Bruce Kovner’s Caxton Associates LP was right behind this move, as the fund sold off about $20.5 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to Roper Technologies Inc (NYSE:ROP). We will take a look at ArcelorMittal (ADR) (NYSE:MT), Micron Technology, Inc. (NASDAQ:MU), NetEase, Inc (ADR) (NASDAQ:NTES), and Workday Inc (NYSE:WDAY). This group of stocks’ market valuations match ROP’s market valuation.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1.62 billion. That figure was $490 million in ROP’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand ArcelorMittal (ADR) (NYSE:MT) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Roper Technologies Inc (NYSE:ROP) is even less popular than MT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None