Keysight Technologies Inc (KEYS): Hedge Fund Sentiment Unchanged

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 Keysight Technologies Inc (NYSE:KEYS).

Hedge fund interest in Keysight Technologies Inc (NYSE:KEYS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that KEYS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AMC Entertainment Holdings Inc (NYSE:AMC), Zebra Technologies Corporation (NASDAQ:ZBRA), and Verisk Analytics, Inc. (NASDAQ:VRSK) to gather more data points.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding Keysight Technologies Inc (NYSE:KEYS).

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

At the end of the second quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KEYS over the last 24 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in Keysight Technologies Inc (NYSE:KEYS) was held by Arrowstreet Capital, which reported holding $112.2 million worth of stock at the end of June. It was followed by Ariel Investments with a $107.8 million position. Other investors bullish on the company included Giverny Capital, D E Shaw, and PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Keysight Technologies Inc (NYSE:KEYS), around 3.99% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, earmarking 3.42 percent of its 13F equity portfolio to KEYS.

Because Keysight Technologies Inc (NYSE:KEYS) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that decided to sell off their full holdings last quarter. Interestingly, David Cohen and Harold Levy’s Iridian Asset Management said goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $1.4 million in stock, and Qing Li’s Sciencast Management was right behind this move, as the fund sold off about $0.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Keysight Technologies Inc (NYSE:KEYS) but similarly valued. We will take a look at AMC Entertainment Holdings Inc (NYSE:AMC), Zebra Technologies Corporation (NASDAQ:ZBRA), Verisk Analytics, Inc. (NASDAQ:VRSK), Maxim Integrated Products Inc. (NASDAQ:MXIM), Synchrony Financial (NYSE:SYF), WEC Energy Group, Inc. (NYSE:WEC), and American Water Works Company, Inc. (NYSE:AWK). This group of stocks’ market caps resemble KEYS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.7 hedge funds with bullish positions and the average amount invested in these stocks was $1525 million. That figure was $554 million in KEYS’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand AMC Entertainment Holdings Inc (NYSE:AMC) is the least popular one with only 21 bullish hedge fund positions. Keysight Technologies Inc (NYSE:KEYS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KEYS is 39.9. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on KEYS as the stock returned 9.3% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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