The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at General Electric Company (NYSE:GE) from the perspective of those elite funds.
Is General Electric Company (NYSE:GE) worth your attention right now? Prominent investors are becoming less hopeful. The number of bullish hedge fund positions shrunk by 5 recently. Our calculations also showed that GE isn’t among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are several formulas shareholders put to use to assess their stock investments. A pair of the most innovative formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best investment managers can outperform the market by a superb amount (see the details here).
We’re going to take a glance at the fresh hedge fund action surrounding General Electric Company (NYSE:GE).
How have hedgies been trading General Electric Company (NYSE:GE)?
At Q1’s end, a total of 54 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2018. On the other hand, there were a total of 47 hedge funds with a bullish position in GE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Trian Partners held the most valuable stake in General Electric Company (NYSE:GE), which was worth $708 million at the end of the first quarter. On the second spot was Pzena Investment Management which amassed $603.9 million worth of shares. Moreover, Eagle Capital Management, Southeastern Asset Management, and Steadfast Capital Management were also bullish on General Electric Company (NYSE:GE), allocating a large percentage of their portfolios to this stock.
Judging by the fact that General Electric Company (NYSE:GE) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies that decided to sell off their full holdings last quarter. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at close to $313.6 million in stock. John A. Levin’s fund, Levin Capital Strategies, also dropped its stock, about $51.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to General Electric Company (NYSE:GE). These stocks are American Tower Corporation (NYSE:AMT), Itau Unibanco Holding SA (NYSE:ITUB), Lockheed Martin Corporation (NYSE:LMT), and Banco Santander (Brasil) SA (NYSE:BSBR). All of these stocks’ market caps match GE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMT | 39 | 3021510 | -2 |
| ITUB | 21 | 1086598 | 3 |
| LMT | 35 | 1219528 | -7 |
| BSBR | 10 | 160949 | 0 |
| Average | 26.25 | 1372146 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $1372 million. That figure was $3676 million in GE’s case. American Tower Corporation (NYSE:AMT) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks General Electric Company (NYSE:GE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately GE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GE were disappointed as the stock returned -5.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
