Is Linde (LIN) Stock A Buy or Sell?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Linde plc (NYSE:LIN).

Is LIN stock a buy or sell? Linde plc (NYSE:LIN) was in 50 hedge funds’ portfolios at the end of December. The all time high for this statistic is 60. LIN has experienced a decrease in support from the world’s most elite money managers in recent months. There were 60 hedge funds in our database with LIN positions at the end of the third quarter. Our calculations also showed that LIN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are dozens of signals investors can use to evaluate stocks. Some of the most innovative signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can beat the S&P 500 by a solid margin (see the details here).

John Armitage Egerton Capital

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). With all of this in mind we’re going to go over the latest hedge fund action surrounding Linde plc (NYSE:LIN).

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

At Q4’s end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in LIN over the last 22 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Ako Capital held the most valuable stake in Linde plc (NYSE:LIN), which was worth $965 million at the end of the fourth quarter. On the second spot was Egerton Capital Limited which amassed $755.7 million worth of shares. Impax Asset Management, Diamond Hill Capital, and Holocene Advisors 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 Ako Capital allocated the biggest weight to Linde plc (NYSE:LIN), around 12.44% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, dishing out 6.11 percent of its 13F equity portfolio to LIN.

Due to the fact that Linde plc (NYSE:LIN) has faced bearish sentiment from hedge fund managers, we can see that there is a sect of money managers who sold off their entire stakes by the end of the fourth quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of all the hedgies followed by Insider Monkey, comprising about $28.1 million in stock. Guy Shahar’s fund, DSAM Partners, also dropped its stock, about $19.5 million worth. These transactions are interesting, as total hedge fund interest fell by 10 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks similar to Linde plc (NYSE:LIN). We will take a look at Shopify Inc (NYSE:SHOP), Anheuser-Busch InBev SA/NV (NYSE:BUD), JD.Com Inc (NASDAQ:JD), Royal Dutch Shell plc (NYSE:RDS), Amgen, Inc. (NASDAQ:AMGN), BHP Group (NYSE:BBL), and HDFC Bank Limited (NYSE:HDB). All of these stocks’ market caps resemble LIN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHOP 90 8723023 9
BUD 18 1294786 0
JD 89 14395875 4
RDS 34 1661345 3
AMGN 49 1039614 4
BBL 18 1215975 2
HDB 31 1535194 -3
Average 47 4266545 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $4267 million. That figure was $3951 million in LIN’s case. Shopify Inc (NYSE:SHOP) is the most popular stock in this table. On the other hand Anheuser-Busch InBev SA/NV (NYSE:BUD) is the least popular one with only 18 bullish hedge fund positions. Linde plc (NYSE:LIN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LIN is 42.2. 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 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately LIN wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on LIN were disappointed as the stock returned 2.6% since the end of December (through 3/19) 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.