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Hedge Funds Dipping Their Toes Back Into Aptiv PLC (APTV)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Aptiv PLC (NYSE:APTV) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Aptiv PLC (NYSE:APTV) the right investment to pursue these days? Hedge funds were becoming hopeful. The number of long hedge fund bets advanced by 10 lately. Aptiv PLC (NYSE:APTV) was in 43 hedge funds’ portfolios at the end of June. The all time high for this statistics is 49. Our calculations also showed that APTV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Blood

David Blood of Generation Investment Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we’re going to take a gander at the recent hedge fund action regarding Aptiv PLC (NYSE:APTV).

What does smart money think about Aptiv PLC (NYSE:APTV)?

At the end of June, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APTV over the last 20 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the biggest position in Aptiv PLC (NYSE:APTV), worth close to $568 million, amounting to 3.3% of its total 13F portfolio. On Generation Investment Management’s heels is Impax Asset Management, managed by Ian Simm, which holds a $168.9 million position; 1.7% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Brandon Haley’s Holocene Advisors, Jack Woodruff’s Candlestick Capital Management and Doug Silverman and Alexander Klabin’s Senator Investment Group. In terms of the portfolio weights assigned to each position Generation Investment Management allocated the biggest weight to Aptiv PLC (NYSE:APTV), around 3.28% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, earmarking 2.95 percent of its 13F equity portfolio to APTV.

Now, specific money managers have been driving this bullishness. Candlestick Capital Management, managed by Jack Woodruff, initiated the largest position in Aptiv PLC (NYSE:APTV). Candlestick Capital Management had $54.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Joseph Samuels’s Islet Management, Christopher James’s Partner Fund Management, and Zach Schreiber’s Point State Capital.

Let’s also examine hedge fund activity in other stocks similar to Aptiv PLC (NYSE:APTV). These stocks are FirstEnergy Corp. (NYSE:FE), Spark Power Group Inc. (NYSE:SPG), Canon Inc. (NYSE:CAJ), Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), Fiat Chrysler Automobiles NV (NYSE:FCAU), and DTE Energy Company (NYSE:DTE). This group of stocks’ market valuations are similar to APTV’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FE 41 992017 -3
SPG 27 531930 -2
CAJ 9 55132 2
EFX 28 1186553 -4
CERN 38 875303 -3
FCAU 20 365898 -5
DTE 24 384220 -5
Average 26.7 627293 -2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $627 million. That figure was $1158 million in APTV’s case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Aptiv PLC (NYSE:APTV) is more popular among hedge funds. Our overall hedge fund sentiment score for APTV is 86.3. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately APTV wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on APTV were disappointed as the stock returned 10.5% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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