Is TT Stock A Buy or Sell?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Trane Technologies plc (NYSE:TT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is TT stock a buy? Trane Technologies plc (NYSE:TT) was in 34 hedge funds’ portfolios at the end of December. The all time high for this statistic is 40. TT investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 37 hedge funds in our database with TT positions at the end of the third quarter. Our calculations also showed that TT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 124 percentage points since March 2017 (see the details here).

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

Heading into the first quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TT over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Trane Technologies plc (NYSE:TT) was held by Generation Investment Management, which reported holding $306.3 million worth of stock at the end of December. It was followed by Impax Asset Management with a $179.2 million position. Other investors bullish on the company included AQR Capital Management, Holocene Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Fosse Capital Partners allocated the biggest weight to Trane Technologies plc (NYSE:TT), around 20% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, designating 1.7 percent of its 13F equity portfolio to TT.

Since Trane Technologies plc (NYSE:TT) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that elected to cut their positions entirely by the end of the fourth quarter. Intriguingly, Mark Kingdon’s Kingdon Capital dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $10.7 million in stock. Brad Farber’s fund, Atika Capital, also said goodbye to its stock, about $6.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the fourth quarter.

Let’s go over hedge fund activity in other stocks similar to Trane Technologies plc (NYSE:TT). These stocks are Centene Corporation (NYSE:CNC), Xilinx, Inc. (NASDAQ:XLNX), Lloyds Banking Group PLC (NYSE:LYG), Barclays PLC (NYSE:BCS), eBay Inc (NASDAQ:EBAY), Lufax Holding Ltd (NYSE:LU), and Manulife Financial Corporation (NYSE:MFC). This group of stocks’ market values are similar to TT’s market value.

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As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $1563 million. That figure was $999 million in TT’s case. Xilinx, Inc. (NASDAQ:XLNX) 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 5 bullish hedge fund positions. Trane Technologies plc (NYSE:TT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TT is 51.3. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on TT as the stock returned 14.4% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.