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Is Agilent Technologies Inc. (A) Going To Burn These Hedge Funds ?

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we publish an article with the title “Recession is Imminent: We Need A Travel Ban NOW”. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Agilent Technologies Inc. (NYSE:A) in this article.

Is Agilent Technologies Inc. (NYSE:A) a buy here? The smart money is taking a bullish view. The number of bullish hedge fund bets advanced by 5 lately. Our calculations also showed that A isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bill Ackman of Pershing Square

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind we’re going to analyze the fresh hedge fund action encompassing Agilent Technologies Inc. (NYSE:A).

Hedge fund activity in Agilent Technologies Inc. (NYSE:A)

Heading into the first quarter of 2020, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards A over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, D. E. Shaw’s D E Shaw has the number one position in Agilent Technologies Inc. (NYSE:A), worth close to $427.2 million, accounting for 0.5% of its total 13F portfolio. The second most bullish fund manager is William von Mueffling of Cantillon Capital Management, with a $351.9 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Ian Simm’s Impax Asset Management, Bill Ackman’s Pershing Square and Tim Hurd and Ed Magnus’s BlueSpruce Investments. In terms of the portfolio weights assigned to each position Clearfield Capital allocated the biggest weight to Agilent Technologies Inc. (NYSE:A), around 10.7% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, earmarking 5.9 percent of its 13F equity portfolio to A.

As industrywide interest jumped, specific money managers have jumped into Agilent Technologies Inc. (NYSE:A) headfirst. Pershing Square, managed by Bill Ackman, initiated the most valuable position in Agilent Technologies Inc. (NYSE:A). Pershing Square had $277.1 million invested in the company at the end of the quarter. Michael Rockefeller and Karl Kroeker’s Woodline Partners also made a $57.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Philip Hilal’s Clearfield Capital, Bhagwan Jay Rao’s Integral Health Asset Management, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Agilent Technologies Inc. (NYSE:A). These stocks are Parker-Hannifin Corporation (NYSE:PH), 0, FirstEnergy Corp. (NYSE:FE), and Spotify Technology S.A. (NYSE:SPOT). This group of stocks’ market valuations match A’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PH 39 971423 11
BKR 37 573421 3
FE 40 1419463 5
SPOT 38 1558227 -2
Average 38.5 1130634 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $1131 million. That figure was $2470 million in A’s case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand 0 is the least popular one with only 37 bullish hedge fund positions. Compared to these stocks Agilent Technologies Inc. (NYSE:A) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately A wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on A were disappointed as the stock returned -17.1% during the first two months of 2020 (through March 9th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.

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

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