United Technologies Corporation (NYSE:UTX) has experienced a decrease in enthusiasm from smart money recently.
If you’d ask most market participants, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the upper echelon of this group, around 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total asset base, and by watching their highest performing equity investments, we have spotted a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as integral, bullish insider trading activity is another way to parse down the world of equities. Just as you’d expect, there are a variety of stimuli for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).
Consequently, we’re going to take a peek at the key action encompassing United Technologies Corporation (NYSE:UTX).
What have hedge funds been doing with United Technologies Corporation (NYSE:UTX)?
In preparation for this quarter, a total of 43 of the hedge funds we track were bullish in this stock, a change of -10% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Fisher Asset Management, managed by Ken Fisher, holds the largest position in United Technologies Corporation (NYSE:UTX). Fisher Asset Management has a $517.7 million position in the stock, comprising 1.4% of its 13F portfolio. On Fisher Asset Management’s heels is Ric Dillon of Diamond Hill Capital, with a $280.5 million position; 2.9% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, Bill Miller’s Legg Mason Capital Management and Ricky Sandler’s Eminence Capital.
Due to the fact that United Technologies Corporation (NYSE:UTX) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of fund managers that decided to sell off their positions entirely in Q1. Interestingly, Lee Ainslie’s Maverick Capital said goodbye to the biggest position of all the hedgies we track, worth about $148.6 million in stock.. Thomas Steyer’s fund, Farallon Capital, also sold off its stock, about $71.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 5 funds in Q1.
What have insiders been doing with United Technologies Corporation (NYSE:UTX)?
Bullish insider trading is best served when the company in question has seen transactions within the past 180 days. Over the latest six-month time period, United Technologies Corporation (NYSE:UTX) has seen zero unique insiders buying, and 13 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to United Technologies Corporation (NYSE:UTX). These stocks are TransDigm Group Incorporated (NYSE:TDG), Rockwell Collins, Inc. (NYSE:COL), General Dynamics Corporation (NYSE:GD), Lockheed Martin Corporation (NYSE:LMT), and The Boeing Company (NYSE:BA). This group of stocks belong to the aerospace/defense products & services industry and their market caps are closest to UTX’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|TransDigm Group Incorporated (NYSE:TDG)||39||1||5|
|Rockwell Collins, Inc. (NYSE:COL)||19||0||12|
|General Dynamics Corporation (NYSE:GD)||48||1||11|
|Lockheed Martin Corporation (NYSE:LMT)||32||0||6|
|The Boeing Company (NYSE:BA)||56||1||7|
With the returns shown by Insider Monkey’s tactics, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and United Technologies Corporation (NYSE:UTX) shareholders fit into this picture quite nicely.