Is ETN Stock A Buy or Sell?

Is Eaton Corporation plc (NYSE:ETN) 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 ETN stock a buy or sell? Eaton Corporation plc (NYSE:ETN) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Eaton Corporation plc (NYSE:ETN) was in 41 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that ETN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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. 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. With all of this in mind we’re going to take a glance at the fresh hedge fund action regarding Eaton Corporation plc (NYSE:ETN).

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

Heading into the first quarter of 2021, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the third quarter of 2020. On the other hand, there were a total of 42 hedge funds with a bullish position in ETN 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.

More specifically, Citadel Investment Group was the largest shareholder of Eaton Corporation plc (NYSE:ETN), with a stake worth $161.5 million reported as of the end of December. Trailing Citadel Investment Group was AQR Capital Management, which amassed a stake valued at $139.6 million. Adage Capital Management, Holocene Advisors, and Lansdowne Partners 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 Socorro Asset Management allocated the biggest weight to Eaton Corporation plc (NYSE:ETN), around 3.42% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, earmarking 2.82 percent of its 13F equity portfolio to ETN.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Interval Partners, managed by Gregg Moskowitz, initiated the largest position in Eaton Corporation plc (NYSE:ETN). Interval Partners had $10.4 million invested in the company at the end of the quarter. Mark R. Freeman’s Socorro Asset Management also made a $6.6 million investment in the stock during the quarter. The other funds with brand new ETN positions are Peter Avellone’s Cartenna Capital, Anand Parekh’s Alyeska Investment Group, and Larry Foley and Paul Farrell’s Bronson Point Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Eaton Corporation plc (NYSE:ETN) but similarly valued. These stocks are Relx PLC (NYSE:RELX), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Canadian Pacific Railway Limited (NYSE:CP), Kimberly Clark Corporation (NYSE:KMB), Las Vegas Sands Corp. (NYSE:LVS), Lululemon Athletica inc. (NASDAQ:LULU), and DoorDash, Inc. (NYSE:DASH). This group of stocks’ market caps resemble ETN’s market cap.

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As you can see these stocks had an average of 44.6 hedge funds with bullish positions and the average amount invested in these stocks was $2612 million. That figure was $834 million in ETN’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 8 bullish hedge fund positions. Eaton Corporation plc (NYSE:ETN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ETN is 58.9. 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. A small number of hedge funds were also right about betting on ETN as the stock returned 11.5% 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.