Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Aon plc (NYSE:AON), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is AON stock a buy or sell? Aon plc (NYSE:AON) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Aon plc (NYSE:AON) was in 63 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 52 hedge funds in our database with AON positions at the end of the third quarter. Our calculations also showed that AON isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
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Do Hedge Funds Think AON Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in AON a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Eagle Capital Management was the largest shareholder of Aon plc (NYSE:AON), with a stake worth $1511.2 million reported as of the end of December. Trailing Eagle Capital Management was Viking Global, which amassed a stake valued at $543.1 million. BlueSpruce Investments, Farallon Capital, and Brave Warrior Capital 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 Brave Warrior Capital allocated the biggest weight to Aon plc (NYSE:AON), around 11.64% of its 13F portfolio. BlueSpruce Investments is also relatively very bullish on the stock, dishing out 10.34 percent of its 13F equity portfolio to AON.
As aggregate interest increased, specific money managers were leading the bulls’ herd. GQG Partners, managed by Rajiv Jain, initiated the most outsized position in Aon plc (NYSE:AON). GQG Partners had $245.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $46.1 million position during the quarter. The following funds were also among the new AON investors: Carl Tiedemann and Michael Tiedemann’s TIG Advisors, Peter Lewis’s LFL Advisers, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Aon plc (NYSE:AON) but similarly valued. These stocks are Prudential Public Limited Company (NYSE:PUK), Emerson Electric Co. (NYSE:EMR), Ambev SA (NYSE:ABEV), Newmont Corporation (NYSE:NEM), Eaton Corporation plc (NYSE:ETN), Relx PLC (NYSE:RELX), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD). This group of stocks’ market values match AON’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 36.7 hedge funds with bullish positions and the average amount invested in these stocks was $1540 million. That figure was $5800 million in AON’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 2 bullish hedge fund positions. Aon plc (NYSE:AON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AON is 73.9. 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. 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 still beat the market by 0.8 percentage points. Hedge funds were also right about betting on AON as the stock returned 5.7% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.