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Is Agilent Technologies Inc. (A) A Good Stock To Buy Right Now?

Hedge fund interest in Agilent Technologies Inc. (NYSE:A) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare A to other stocks including Cummins Inc. (NYSE:CMI), Hilton Worldwide Holdings Inc (NYSE:HLT), and Atlassian Corporation Plc (NASDAQ:TEAM) to get a better sense of its popularity.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

Let’s analyze the key hedge fund action surrounding Agilent Technologies Inc. (NYSE:A).

How are hedge funds trading Agilent Technologies Inc. (NYSE:A)?

At Q4’s end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2018. On the other hand, there were a total of 52 hedge funds with a bullish position in A a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

A_mar2019

The largest stake in Agilent Technologies Inc. (NYSE:A) was held by Cantillon Capital Management, which reported holding $240 million worth of stock at the end of September. It was followed by D E Shaw with a $235.2 million position. Other investors bullish on the company included AQR Capital Management, Marshall Wace LLP, and Renaissance Technologies.

Because Agilent Technologies Inc. (NYSE:A) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who sold off their entire stakes heading into Q3. It’s worth mentioning that Christopher James’s Partner Fund Management dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $88 million in stock. Barry Rosenstein’s fund, JANA Partners, also dumped its stock, about $57.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Agilent Technologies Inc. (NYSE:A). These stocks are Cummins Inc. (NYSE:CMI), Hilton Worldwide Holdings Inc (NYSE:HLT), Atlassian Corporation Plc (NASDAQ:TEAM), and Zimmer Biomet Holdings Inc (NYSE:ZBH). All of these stocks’ market caps resemble A’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMI 35 584133 3
HLT 47 4153280 2
TEAM 34 1085223 6
ZBH 36 1037508 -4
Average 38 1715036 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1715 million. That figure was $1976 million in A’s case. Hilton Worldwide Holdings Inc (NYSE:HLT) is the most popular stock in this table. On the other hand Atlassian Corporation Plc (NASDAQ:TEAM) is the least popular one with only 34 bullish hedge fund positions. Agilent Technologies Inc. (NYSE:A) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on Agilent as the stock returned 20.2% and outperformed the market as well.

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

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