Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of TE Connectivity Ltd. (NYSE:TEL) based on that data.
TE Connectivity Ltd. (NYSE:TEL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 39 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that TEL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TEL to other stocks including Biogen Inc. (NASDAQ:BIIB), Palantir Technologies Inc. (NYSE:PLTR), and EOG Resources Inc (NYSE:EOG) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. With all of this in mind we’re going to take a gander at the new hedge fund action encompassing TE Connectivity Ltd. (NYSE:TEL).
Do Hedge Funds Think TEL Is A Good Stock To Buy Now?
At first quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TEL over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in TE Connectivity Ltd. (NYSE:TEL) was held by Generation Investment Management, which reported holding $792.5 million worth of stock at the end of December. It was followed by First Pacific Advisors LLC with a $379.6 million position. Other investors bullish on the company included Impax Asset Management, Third Point, and Polar Capital. In terms of the portfolio weights assigned to each position LFL Advisers allocated the biggest weight to TE Connectivity Ltd. (NYSE:TEL), around 14.65% of its 13F portfolio. First Pacific Advisors LLC is also relatively very bullish on the stock, designating 5.16 percent of its 13F equity portfolio to TEL.
Since TE Connectivity Ltd. (NYSE:TEL) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their entire stakes by the end of the first quarter. Intriguingly, Barry Lebovits and Joshua Kuntz’s Rivulet Capital said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling about $129.5 million in stock, and Bernard Lambilliotte’s Ecofin Ltd was right behind this move, as the fund dropped about $7.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to TE Connectivity Ltd. (NYSE:TEL). These stocks are Biogen Inc. (NASDAQ:BIIB), Palantir Technologies Inc. (NYSE:PLTR), EOG Resources Inc (NYSE:EOG), Roper Technologies Inc. (NYSE:ROP), DoorDash, Inc. (NYSE:DASH), American Electric Power Company, Inc. (NYSE:AEP), and National Grid plc (NYSE:NGG). This group of stocks’ market valuations match TEL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIIB | 63 | 2481373 | 0 |
| PLTR | 32 | 1147240 | -6 |
| EOG | 30 | 596119 | -15 |
| ROP | 42 | 1497344 | 2 |
| DASH | 38 | 4774544 | 0 |
| AEP | 32 | 809288 | 0 |
| NGG | 9 | 331590 | 4 |
| Average | 35.1 | 1662500 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1662 million. That figure was $2344 million in TEL’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 9 bullish hedge fund positions. TE Connectivity Ltd. (NYSE:TEL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TEL is 59.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately TEL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TEL were disappointed as the stock returned 4% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.
Follow Te Connectivity Ltd. (NYSE:TEL)
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Disclosure: None. This article was originally published at Insider Monkey.
