Is Aptiv PLC (APTV) Going to Burn These Hedge Funds?

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost a third of its value since the end of July. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2018 yielded an average return of 6.7% year-to-date, vs. a gain of 2.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Aptiv PLC (NYSE:APTV).

Hedge fund interest in Aptiv PLC (NYSE:APTV) 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 APTV to other stocks including Coca-Cola European Partners plc (NYSE:CCEP), Edison International (NYSE:EIX), and TELUS Corporation (NYSE:TU) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Blood

Let’s take a gander at the latest hedge fund action surrounding Aptiv PLC (NYSE:APTV).

What have hedge funds been doing with Aptiv PLC (NYSE:APTV)?

At Q3’s end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in APTV over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with APTV Positions

More specifically, Senator Investment Group was the largest shareholder of Aptiv PLC (NYSE:APTV), with a stake worth $308.3 million reported as of the end of September. Trailing Senator Investment Group was Generation Investment Management, which amassed a stake valued at $258.4 million. Citadel Investment Group, Glenview Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Since Aptiv PLC (NYSE:APTV) has faced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that slashed their full holdings last quarter. Interestingly, Christopher A. Winham’s Tide Point Capital dropped the biggest stake of the 700 funds tracked by Insider Monkey, comprising about $24.4 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund dumped about $19.9 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 now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Aptiv PLC (NYSE:APTV) but similarly valued. These stocks are Coca-Cola European Partners plc (NYSE:CCEP), Edison International (NYSE:EIX), TELUS Corporation (NYSE:TU), and Teva Pharmaceutical Industries Limited (NYSE:TEVA). All of these stocks’ market caps are closest to APTV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCEP 23 476588 1
EIX 25 1198233 -3
TU 12 295888 4
TEVA 36 2509183 6
Average 24 1119973 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $1.12 billion. That figure was $1.63 billion in APTV’s case. Teva Pharmaceutical Industries Limited (NYSE:TEVA) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Aptiv PLC (NYSE:APTV) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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