The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Texas Instruments Incorporated (NASDAQ:TXN)?
Is Texas Instruments Incorporated (NASDAQ:TXN) a great stock to buy now? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions were cut by 4 lately. Our calculations also showed that TXN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 44 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the key hedge fund action surrounding Texas Instruments Incorporated (NASDAQ:TXN).
How have hedgies been trading Texas Instruments Incorporated (NASDAQ:TXN)?
At Q1’s end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2019. On the other hand, there were a total of 43 hedge funds with a bullish position in TXN a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of Texas Instruments Incorporated (NASDAQ:TXN), with a stake worth $476.2 million reported as of the end of September. Trailing Generation Investment Management was AQR Capital Management, which amassed a stake valued at $320.3 million. Diamond Hill Capital, Citadel Investment Group, and Adage Capital 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 Heathbridge Capital Management allocated the biggest weight to Texas Instruments Incorporated (NASDAQ:TXN), around 5.61% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, earmarking 4.39 percent of its 13F equity portfolio to TXN.
Since Texas Instruments Incorporated (NASDAQ:TXN) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds who were dropping their positions entirely in the third quarter. At the top of the heap, Alex Snow’s Lansdowne Partners dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $141.3 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund cut about $69.5 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Texas Instruments Incorporated (NASDAQ:TXN) but similarly valued. These stocks are BHP Billiton Limited (NYSE:BHP), Linde plc (NYSE:LIN), Citigroup Inc. (NYSE:C), and Royal Bank of Canada (NYSE:RY). This group of stocks’ market caps are closest to TXN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.25 hedge funds with bullish positions and the average amount invested in these stocks was $2361 million. That figure was $1745 million in TXN’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. Texas Instruments Incorporated (NASDAQ:TXN) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately TXN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TXN were disappointed as the stock returned 14.4% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.