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Hedge Funds Are Selling Agilent Technologies Inc. (A)

Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 26% in 2019 (through November 22nd). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of nearly 35% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Agilent Technologies Inc. (NYSE:A).

Agilent Technologies Inc. (NYSE:A) was in 37 hedge funds’ portfolios at the end of the third quarter of 2019. A has experienced a decrease in activity from the world’s largest hedge funds in recent months. There were 39 hedge funds in our database with A holdings at the end of the previous quarter. Our calculations also showed that A isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are plenty of tools stock market investors use to analyze their holdings. A couple of the most useful tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the S&P 500 by a very impressive amount (see the details here).

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the key hedge fund action encompassing Agilent Technologies Inc. (NYSE:A).

What have hedge funds been doing with Agilent Technologies Inc. (NYSE:A)?

At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 40 hedge funds with a bullish position in A a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

A_dec2019

When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by David E. Shaw, holds the largest position in Agilent Technologies Inc. (NYSE:A). D E Shaw has a $386.4 million position in the stock, comprising 0.5% of its 13F portfolio. On D E Shaw’s heels is Cantillon Capital Management, managed by William von Mueffling, which holds a $323.1 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Ian Simm’s Impax Asset Management, Tim Hurd and Ed Magnus’s BlueSpruce Investments and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Agilent Technologies Inc. (NYSE:A), around 6.8% of its portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 3.17 percent of its 13F equity portfolio to A.

Since Agilent Technologies Inc. (NYSE:A) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of money managers that elected to cut their full holdings in the third quarter. Interestingly, Samuel Isaly’s OrbiMed Advisors cut the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $66.7 million in stock, and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management was right behind this move, as the fund cut about $13.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Agilent Technologies Inc. (NYSE:A). These stocks are IDEXX Laboratories, Inc. (NASDAQ:IDXX), Hormel Foods Corporation (NYSE:HRL), Entergy Corporation (NYSE:ETR), and Chipotle Mexican Grill, Inc. (NYSE:CMG). This group of stocks’ market caps match A’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDXX 29 509187 -8
HRL 19 190410 3
ETR 25 1677907 -5
CMG 38 4057541 1
Average 27.75 1608761 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1609 million. That figure was $1858 million in A’s case. Chipotle Mexican Grill, Inc. (NYSE:CMG) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 19 bullish hedge fund positions. Agilent Technologies Inc. (NYSE:A) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately A wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on A were disappointed as the stock returned 5.4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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