How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Intuit Inc. (NASDAQ:INTU).
Is INTU stock a buy or sell? Intuit Inc. (NASDAQ:INTU) investors should pay attention to an increase in hedge fund sentiment lately. Intuit Inc. (NASDAQ:INTU) was in 68 hedge funds’ portfolios at the end of December. The all time high for this statistic is 55. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that INTU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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Do Hedge Funds Think INTU Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 68 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the previous quarter. On the other hand, there were a total of 54 hedge funds with a bullish position in INTU a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Intuit Inc. (NASDAQ:INTU) was held by Fundsmith LLP, which reported holding $1742.6 million worth of stock at the end of December. It was followed by Third Point with a $379.9 million position. Other investors bullish on the company included AQR Capital Management, GLG Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Blue Whale Capital allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 7.93% of its 13F portfolio. Fundsmith LLP is also relatively very bullish on the stock, designating 5.78 percent of its 13F equity portfolio to INTU.
As aggregate interest increased, some big names have been driving this bullishness. Foxhaven Asset Management, managed by Michael Pausic, initiated the largest position in Intuit Inc. (NASDAQ:INTU). Foxhaven Asset Management had $115.7 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $91.9 million position during the quarter. The other funds with new positions in the stock are Chase Coleman’s Tiger Global Management LLC, Dmitry Balyasny’s Balyasny Asset Management, and Leon Shaulov’s Maplelane Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Intuit Inc. (NASDAQ:INTU) but similarly valued. These stocks are The Toronto-Dominion Bank (NYSE:TD), Sea Limited (NYSE:SE), 3M Company (NYSE:MMM), American Tower Corporation (REIT) (NYSE:AMT), The Charles Schwab Corporation (NYSE:SCHW), Lockheed Martin Corporation (NYSE:LMT), and Caterpillar Inc. (NYSE:CAT). This group of stocks’ market valuations are closest to INTU’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 58.4 hedge funds with bullish positions and the average amount invested in these stocks was $4042 million. That figure was $4693 million in INTU’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand The Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 22 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INTU is 64.7. 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. 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 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately INTU wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on INTU were disappointed as the stock returned 4.4% since the end of December (through 3/12) 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.