Is Caterpillar (CAT) 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 Caterpillar Inc. (NYSE:CAT) based on that data.

Is CAT stock a buy or sell? Caterpillar Inc. (NYSE:CAT) was in 53 hedge funds’ portfolios at the end of December. The all time high for this statistic is 63. CAT investors should be aware of an increase in hedge fund interest recently. There were 41 hedge funds in our database with CAT positions at the end of the third quarter. Our calculations also showed that CAT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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

At fourth quarter’s end, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the third quarter of 2020. By comparison, 52 hedge funds held shares or bullish call options in CAT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Bill & Melinda Gates Foundation Trust held the most valuable stake in Caterpillar Inc. (NYSE:CAT), which was worth $2049.7 million at the end of the fourth quarter. On the second spot was Fisher Asset Management which amassed $1126.3 million worth of shares. Citadel Investment Group, Diamond Hill Capital, and Adage Capital Management 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 Bill & Melinda Gates Foundation Trust allocated the biggest weight to Caterpillar Inc. (NYSE:CAT), around 9.18% of its 13F portfolio. Socorro Asset Management is also relatively very bullish on the stock, setting aside 3.22 percent of its 13F equity portfolio to CAT.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the largest position in Caterpillar Inc. (NYSE:CAT). Millennium Management had $53.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $11.3 million position during the quarter. The other funds with brand new CAT positions are Steve Cohen’s Point72 Asset Management, John Smith Clark’s Southpoint Capital Advisors, and Louis Bacon’s Moore Global Investments.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Caterpillar Inc. (NYSE:CAT) but similarly valued. These stocks are Square, Inc. (NYSE:SQ), American Express Company (NYSE:AXP), Zoom Video Communications, Inc. (NASDAQ:ZM), The Estee Lauder Companies Inc (NYSE:EL), Intuitive Surgical, Inc. (NASDAQ:ISRG), General Electric Company (NYSE:GE), and Rio Tinto Group (NYSE:RIO). All of these stocks’ market caps resemble CAT’s market cap.

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As you can see these stocks had an average of 57.6 hedge funds with bullish positions and the average amount invested in these stocks was $7072 million. That figure was $4158 million in CAT’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 26 bullish hedge fund positions. Caterpillar Inc. (NYSE:CAT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CAT is 56.7. 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. A small number of hedge funds were also right about betting on CAT as the stock returned 24.4% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.

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