Here is What Hedge Funds Think of Tyco International PLC. (TYC)

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tyco International PLC. (NYSE:TYC).

Is Tyco International PLC. (NYSE:TYC) going to take off soon? Hedge funds are turning less bullish. The number of long hedge fund positions decreased by 4 lately. TYC was in 35 hedge funds’ portfolios at the end of September. There were 39 hedge funds in our database with TYC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Pearson PLC (ADR) (NYSE:PSO), Weyerhaeuser Company (NYSE:WY), and Principal Financial Group Inc (NYSE:PFG) to gather more data points.

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To most traders, hedge funds are viewed as unimportant, old financial tools of the past. While there are more than 8000 funds trading at present, Our researchers hone in on the aristocrats of this club, about 700 funds. These investment experts direct bulk of the hedge fund industry’s total capital, and by paying attention to their inimitable equity investments, Insider Monkey has revealed various investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to take a glance at the new action encompassing Tyco International PLC. (NYSE:TYC).

What does the smart money think about Tyco International PLC. (NYSE:TYC)?

Heading into Q4, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in Tyco International PLC. (NYSE:TYC). Adage Capital Management has an $286.2 million position in the stock, comprising 0.8% of its 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with an $171 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of Jim Simons’ Renaissance Technologies, Sandy Nairn’s Edinburgh Partners and Mario Gabelli’s GAMCO Investors.

Since Tyco International PLC. (NYSE:TYC) has faced falling interest from hedge fund managers, we can see that there were a few money managers who were dropping their positions entirely heading into Q4. At the top of the heap, Daniel S. Och’s OZ Management sold off the largest investment of all the hedgies tracked by Insider Monkey, totaling an estimated $20.5 million in call options., and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund dropped about $19.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Tyco International PLC. (NYSE:TYC). These stocks are Pearson PLC (ADR) (NYSE:PSO), Weyerhaeuser Company (NYSE:WY), Principal Financial Group Inc (NYSE:PFG), and Medivation Inc (NASDAQ:MDVN). All of these stocks’ market caps are closest to TYC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSO 4 22557 -5
WY 30 1054935 1
PFG 19 164301 -2
MDVN 34 1157808 -5

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $600 million. That figure was $1,010 million in TYC’s case. Medivation Inc (NASDAQ:MDVN) is the most popular stock in this table. On the other hand Pearson PLC (ADR) (NYSE:PSO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Tyco International PLC. (NYSE:TYC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.