Hedge Funds Aren’t Crazy About Johnson Controls, Inc. (NYSE:JCI) Anymore

Johnson Controls, Inc. (NYSE:JCI) was in 24 hedge funds’ portfolio at the end of December. JCI shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 24 hedge funds in our database with JCI positions at the end of the previous quarter.

Johnson Controls Inc (NYSE:JCI)

To the average investor, there are a multitude of metrics market participants can use to monitor the equity markets. A duo of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat their index-focused peers by a significant amount (see just how much).

Just as integral, positive insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are many reasons for an executive to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).

With all of this in mind, let’s take a peek at the key action regarding Johnson Controls, Inc. (NYSE:JCI).

How have hedgies been trading Johnson Controls, Inc. (NYSE:JCI)?

Heading into 2013, a total of 24 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Edinburgh Partners, managed by Sandy Nairn, holds the most valuable position in Johnson Controls, Inc. (NYSE:JCI). Edinburgh Partners has a $188 million position in the stock, comprising 10.6% of its 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $67 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Eric Bannasch’s Cadian Capital.

Because Johnson Controls, Inc. (NYSE:JCI) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of fund managers who sold off their full holdings at the end of the year. It’s worth mentioning that Wayne Cooperman’s Cobalt Capital Management cut the biggest investment of the “upper crust” of funds we monitor, worth about $10 million in stock.. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $3 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Johnson Controls, Inc. (NYSE:JCI)?

Bullish insider trading is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, Johnson Controls, Inc. (NYSE:JCI) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

With the results exhibited by our time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading activity, and Johnson Controls, Inc. (NYSE:JCI) applies perfectly to this mantra.

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