Is Air Products & Chemicals, Inc. (NYSE:APD) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is APD stock a buy or sell? The smart money was taking a bullish view. The number of bullish hedge fund positions moved up by 1 in recent months. Air Products & Chemicals, Inc. (NYSE:APD) was in 50 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 77. Our calculations also showed that APD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 49 hedge funds in our database with APD positions at the end of the third quarter.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article).Keeping this in mind let’s analyze the new hedge fund action surrounding Air Products & Chemicals, Inc. (NYSE:APD).
Do Hedge Funds Think APD Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards APD over the last 22 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 Air Products & Chemicals, Inc. (NYSE:APD) was held by Millennium Management, which reported holding $208.4 million worth of stock at the end of December. It was followed by Viking Global with a $173.9 million position. Other investors bullish on the company included Suvretta Capital Management, Adage Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Bronson Point Partners allocated the biggest weight to Air Products & Chemicals, Inc. (NYSE:APD), around 5.95% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, earmarking 4.83 percent of its 13F equity portfolio to APD.
As aggregate interest increased, key money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, established the biggest position in Air Products & Chemicals, Inc. (NYSE:APD). Viking Global had $173.9 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also initiated a $16 million position during the quarter. The other funds with new positions in the stock are Larry Foley and Paul Farrell’s Bronson Point Partners, Michael Gelband’s ExodusPoint Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Air Products & Chemicals, Inc. (NYSE:APD) but similarly valued. These stocks are Norfolk Southern Corp. (NYSE:NSC), Spotify Technology S.A. (NYSE:SPOT), General Motors Company (NYSE:GM), Marsh & McLennan Companies, Inc. (NYSE:MMC), VMware, Inc. (NYSE:VMW), Atlassian Corporation Plc (NASDAQ:TEAM), and The Progressive Corporation (NYSE:PGR). This group of stocks’ market values are closest to APD’s market value.
|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 51 hedge funds with bullish positions and the average amount invested in these stocks was $2662 million. That figure was $1282 million in APD’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 35 bullish hedge fund positions. Air Products & Chemicals, Inc. (NYSE:APD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APD is 46.9. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately APD wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); APD investors were disappointed as the stock returned 0.8% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Air Products & Chemicals Inc. (NYSE:APD)
Follow Air Products & Chemicals Inc. (NYSE:APD)
Disclosure: None. This article was originally published at Insider Monkey.