Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Johnson Controls International plc (NYSE:JCI) changed recently.
Is Johnson Controls International plc (NYSE:JCI) undervalued? Hedge funds were becoming hopeful. The number of bullish hedge fund bets increased by 6 lately. Johnson Controls International plc (NYSE:JCI) was in 45 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 55. Our calculations also showed that JCI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a gander at the fresh hedge fund action encompassing Johnson Controls International plc (NYSE:JCI).
Do Hedge Funds Think JCI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in JCI a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Johnson Controls International plc (NYSE:JCI), with a stake worth $243.5 million reported as of the end of September. Trailing Citadel Investment Group was Holocene Advisors, which amassed a stake valued at $208.9 million. AQR Capital Management, Bridgewater Associates, and Adage Capital Management 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 Otter Creek Management allocated the biggest weight to Johnson Controls International plc (NYSE:JCI), around 2.26% of its 13F portfolio. Sirios Capital Management is also relatively very bullish on the stock, earmarking 2.13 percent of its 13F equity portfolio to JCI.
As aggregate interest increased, key money managers have jumped into Johnson Controls International plc (NYSE:JCI) headfirst. TwinBeech Capital, managed by Jinghua Yan, initiated the most valuable position in Johnson Controls International plc (NYSE:JCI). TwinBeech Capital had $12.6 million invested in the company at the end of the quarter. Brad Farber’s Atika Capital also made a $9.5 million investment in the stock during the quarter. The other funds with brand new JCI positions are Mika Toikka’s AlphaCrest Capital Management, Roger Keith Long’s Otter Creek Management, and Javier Velazquez’s Albar Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Johnson Controls International plc (NYSE:JCI) but similarly valued. These stocks are Keurig Dr Pepper Inc. (NASDAQ:KDP), Coupang, Inc. (NYSE:CPNG), Wipro Limited (NYSE:WIT), Marriott International Inc (NYSE:MAR), Twitter Inc (NYSE:TWTR), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), and Coinbase Global Inc. (NASDAQ:COIN). This group of stocks’ market values match JCI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KDP | 33 | 1269519 | 5 |
| CPNG | 45 | 10769505 | 12 |
| WIT | 15 | 183023 | 1 |
| MAR | 39 | 2878858 | -10 |
| TWTR | 94 | 6305635 | 5 |
| SMFG | 11 | 50245 | 0 |
| COIN | 50 | 2968201 | 50 |
| Average | 41 | 3489284 | 9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $3489 million. That figure was $1032 million in JCI’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 11 bullish hedge fund positions. Johnson Controls International plc (NYSE:JCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JCI is 55. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on JCI as the stock returned 9.8% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Johnson Controls Inc (Old Filings) (NYSE:JCI)
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Disclosure: None. This article was originally published at Insider Monkey.
