Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Teledyne Technologies Incorporated (NYSE:TDY).
Teledyne Technologies Incorporated (NYSE:TDY) has experienced an increase in activity from the world’s largest hedge funds in recent months. Teledyne Technologies Incorporated (NYSE:TDY) was in 36 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TDY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing Teledyne Technologies Incorporated (NYSE:TDY).
Do Hedge Funds Think TDY Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TDY over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Teledyne Technologies Incorporated (NYSE:TDY), with a stake worth $608.6 million reported as of the end of June. Trailing Select Equity Group was Citadel Investment Group, which amassed a stake valued at $106.6 million. GLG Partners, Fisher Asset Management, and Point72 Asset 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 11 Capital Partners allocated the biggest weight to Teledyne Technologies Incorporated (NYSE:TDY), around 4.15% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, setting aside 2.08 percent of its 13F equity portfolio to TDY.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the most outsized position in Teledyne Technologies Incorporated (NYSE:TDY). Adage Capital Management had $46.1 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $6.9 million position during the quarter. The following funds were also among the new TDY investors: Michael Gelband’s ExodusPoint Capital, Phil Frohlich’s Prescott Group Capital Management, and Ray Dalio’s Bridgewater Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Teledyne Technologies Incorporated (NYSE:TDY) but similarly valued. These stocks are ORIX Corporation (NYSE:IX), Sun Communities Inc (NYSE:SUI), Plug Power, Inc. (NASDAQ:PLUG), Regions Financial Corporation (NYSE:RF), Cenovus Energy Inc (NYSE:CVE), Just Eat Takeaway.com N.V. (NASDAQ:GRUB), and Mid America Apartment Communities Inc (NYSE:MAA). All of these stocks’ market caps resemble TDY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IX | 4 | 4271 | -1 |
| SUI | 30 | 821616 | -5 |
| PLUG | 34 | 878412 | 9 |
| RF | 33 | 242962 | 1 |
| CVE | 32 | 562772 | 9 |
| GRUB | 24 | 609889 | -11 |
| MAA | 14 | 79867 | -11 |
| Average | 24.4 | 457113 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $457 million. That figure was $1441 million in TDY’s case. Plug Power, Inc. (NASDAQ:PLUG) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Teledyne Technologies Incorporated (NYSE:TDY) is more popular among hedge funds. Our overall hedge fund sentiment score for TDY is 90. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately TDY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TDY were disappointed as the stock returned 0.9% since the end of the second quarter (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Teledyne Technologies Inc (NYSE:TDY)
Follow Teledyne Technologies Inc (NYSE:TDY)
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Disclosure: None. This article was originally published at Insider Monkey.
