Is APH Stock A Buy or Sell?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Amphenol Corporation (NYSE:APH) based on that data.

Is APH stock a buy or sell? Amphenol Corporation (NYSE:APH) has experienced a decrease in hedge fund interest in recent months. Amphenol Corporation (NYSE:APH) was in 41 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 49. There were 49 hedge funds in our database with APH holdings at the end of September. Our calculations also showed that APH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let’s analyze the key hedge fund action surrounding Amphenol Corporation (NYSE:APH).

Do Hedge Funds Think APH Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position in APH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest position in Amphenol Corporation (NYSE:APH), worth close to $598.8 million, amounting to 2.5% of its total 13F portfolio. Sitting at the No. 2 spot is Michael Rockefeller and Karl Kroeker of Woodline Partners, with a $95.2 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Ayrshire Capital Management allocated the biggest weight to Amphenol Corporation (NYSE:APH), around 3.61% of its 13F portfolio. Fundsmith Long/Short Fund is also relatively very bullish on the stock, earmarking 3.17 percent of its 13F equity portfolio to APH.

Due to the fact that Amphenol Corporation (NYSE:APH) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings heading into Q1. Interestingly, Aaron Cowen’s Suvretta Capital Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $99.8 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $35.9 million worth. These moves are interesting, as total hedge fund interest was cut by 8 funds heading into Q1.

Let’s go over hedge fund activity in other stocks similar to Amphenol Corporation (NYSE:APH). We will take a look at Digital Realty Trust, Inc. (NYSE:DLR), Chipotle Mexican Grill, Inc. (NYSE:CMG), BCE Inc. (NYSE:BCE), TC Energy Corporation (NYSE:TRP), Canadian Imperial Bank of Commerce (NYSE:CM), Cadence Design Systems Inc (NASDAQ:CDNS), and Liberty Broadband Corp (NASDAQ:LBRDK). This group of stocks’ market caps match APH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DLR 23 316827 -2
CMG 35 3374121 -17
BCE 13 90782 3
TRP 19 249036 3
CM 13 210773 1
CDNS 32 1405426 -5
LBRDK 80 7270683 24
Average 30.7 1845378 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $1845 million. That figure was $1049 million in APH’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand BCE Inc. (NYSE:BCE) is the least popular one with only 13 bullish hedge fund positions. Amphenol Corporation (NYSE:APH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APH is 43. 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 positive signal but 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 beat the market again by 0.8 percentage points. Unfortunately APH wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on APH were disappointed as the stock returned -1.7% 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 many of these stocks already outperformed the market since 2019.

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