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Hedge Funds Warming Up To Aptiv PLC (APTV)

Is Aptiv PLC (NYSE:APTV) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Aptiv PLC (NYSE:APTV) has seen an increase in support from the world’s most elite money managers in recent months. APTV was in 27 hedge funds’ portfolios at the end of September. There were 26 hedge funds in our database with APTV positions at the end of the previous quarter. Our calculations also showed that APTV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Currently the only ETF that had at least 8% allocation to APTV is First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund  (NASDAQ:GRID).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

David Blood

David Blood of Generation Investment 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 check out the fresh hedge fund action regarding Aptiv PLC (NYSE:APTV).

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

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in APTV over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

APTV_dec2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in Aptiv PLC (NYSE:APTV). Generation Investment Management has a $495.3 million position in the stock, comprising 3.5% of its 13F portfolio. Sitting at the No. 2 spot is Impax Asset Management, managed by Ian Simm, which holds a $128 million position; 1.7% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish consist of Doug Silverman and Alexander Klabin’s Senator Investment Group, Brandon Haley’s Holocene Advisors and Seth Wunder’s Black-and-White Capital. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to Aptiv PLC (NYSE:APTV), around 6.24% of its portfolio. Black-and-White Capital is also relatively very bullish on the stock, designating 3.67 percent of its 13F equity portfolio to APTV.

As industrywide interest jumped, specific money managers have jumped into Aptiv PLC (NYSE:APTV) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the most valuable position in Aptiv PLC (NYSE:APTV). Polar Capital had $10.2 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Michael Gelband’s ExodusPoint Capital, and Paul Marshall and Ian Wace’s Marshall Wace.

Let’s check out hedge fund activity in other stocks similar to Aptiv PLC (NYSE:APTV). We will take a look at Verisign, Inc. (NASDAQ:VRSN), Corning Incorporated (NYSE:GLW), Telefonica Brasil SA (NYSE:VIV), and Interactive Brokers Group, Inc. (NASDAQ:IBKR). This group of stocks’ market valuations are closest to APTV’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRSN 30 5568484 -2
GLW 27 203363 1
VIV 13 92351 1
IBKR 24 1030551 0
Average 23.5 1723687 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $1724 million. That figure was $888 million in APTV’s case. Verisign, Inc. (NASDAQ:VRSN) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 13 bullish hedge fund positions. Aptiv PLC (NYSE:APTV) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on APTV, though not to the same extent, as the stock returned 7.6% during the first two months of the fourth quarter and outperformed the market as well.

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

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