The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Raytheon Technologies Corp (NYSE:RTX).
Is RTX stock a buy or sell? Raytheon Technologies Corp (NYSE:RTX) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. Raytheon Technologies Corp (NYSE:RTX) was in 59 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 81. Our calculations also showed that RTX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 check out the recent hedge fund action regarding Raytheon Technologies Corp (NYSE:RTX).
Do Hedge Funds Think RTX Is A Good Stock To Buy Now?
At Q4’s end, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. By comparison, 81 hedge funds held shares or bullish call options in RTX 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.
More specifically, Fisher Asset Management was the largest shareholder of Raytheon Technologies Corp (NYSE:RTX), with a stake worth $423 million reported as of the end of December. Trailing Fisher Asset Management was Soroban Capital Partners, which amassed a stake valued at $406 million. Farallon Capital, D E Shaw, and Two Sigma 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 Jade Capital Advisors allocated the biggest weight to Raytheon Technologies Corp (NYSE:RTX), around 5.01% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, designating 4.59 percent of its 13F equity portfolio to RTX.
Now, key money managers were leading the bulls’ herd. Farallon Capital, assembled the most outsized position in Raytheon Technologies Corp (NYSE:RTX). Farallon Capital had $324.8 million invested in the company at the end of the quarter. Javier Velazquez’s Albar Capital also made a $9.3 million investment in the stock during the quarter. The other funds with brand new RTX positions are Robert Vincent McHugh’s Jade Capital Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Michael Cowley’s Sandbar Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Raytheon Technologies Corp (NYSE:RTX) but similarly valued. We will take a look at ServiceNow Inc (NYSE:NOW), HSBC Holdings plc (NYSE:HSBC), Intuit Inc. (NASDAQ:INTU), Toronto-Dominion Bank (NYSE:TD), Sea Limited (NYSE:SE), 3M Company (NYSE:MMM), and American Tower Corporation (NYSE:AMT). This group of stocks’ market caps are closest to RTX’s market cap.
|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 60 hedge funds with bullish positions and the average amount invested in these stocks was $4144 million. That figure was $2729 million in RTX’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 14 bullish hedge fund positions. Raytheon Technologies Corp (NYSE:RTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RTX is 53.1. 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 RTX as the stock returned 10.3% 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.