While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Koninklijke Philips NV (NYSE:PHG).
Koninklijke Philips NV (NYSE:PHG) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. PHG investors should be aware of a decrease in enthusiasm from smart money recently. There were 11 hedge funds in our database with PHG holdings at the end of March. Our calculations also showed that PHG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Peter Rathjens of Arrowstreet Capital
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Do Hedge Funds Think PHG Is A Good Stock To Buy Now?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PHG over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Koninklijke Philips NV (NYSE:PHG), with a stake worth $48.7 million reported as of the end of June. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $48 million. Millennium Management, Millennium Management, and Citadel Investment Group 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 Beddow Capital Management allocated the biggest weight to Koninklijke Philips NV (NYSE:PHG), around 2.01% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, designating 0.72 percent of its 13F equity portfolio to PHG.
Due to the fact that Koninklijke Philips NV (NYSE:PHG) has experienced bearish sentiment from the smart money, it’s safe to say that there were a few hedgies who sold off their positions entirely last quarter. Intriguingly, D. E. Shaw’s D E Shaw cut the biggest position of the 750 funds followed by Insider Monkey, valued at about $7.3 million in stock. Guy Levy’s fund, Soleus Capital, also said goodbye to its stock, about $3.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Koninklijke Philips NV (NYSE:PHG). We will take a look at Lloyds Banking Group PLC (NYSE:LYG), Kimberly Clark Corporation (NYSE:KMB), Constellation Brands, Inc. (NYSE:STZ), T. Rowe Price Group, Inc. (NASDAQ:TROW), IHS Markit Ltd. (NYSE:INFO), Agilent Technologies Inc. (NYSE:A), and The Bank of New York Mellon Corporation (NYSE:BK). This group of stocks’ market caps match PHG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYG | 8 | 16299 | 3 |
| KMB | 37 | 903375 | 6 |
| STZ | 50 | 1607881 | -8 |
| TROW | 24 | 407032 | -2 |
| INFO | 61 | 5947551 | 7 |
| A | 39 | 3891487 | -3 |
| BK | 52 | 4907372 | 3 |
| Average | 38.7 | 2525857 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $2526 million. That figure was $123 million in PHG’s case. IHS Markit Ltd. (NYSE:INFO) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 8 bullish hedge fund positions. Koninklijke Philips NV (NYSE:PHG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PHG is 20.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately PHG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PHG investors were disappointed as the stock returned -8.2% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Koninklijke Philips Elec N V (NYSE:PHG)
Follow Koninklijke Philips Elec N V (NYSE:PHG)
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Disclosure: None. This article was originally published at Insider Monkey.
