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Should You Buy Allegion plc (ALLE)?

Does Allegion plc (NYSE:ALLE) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Allegion plc (NYSE:ALLE) shareholders have witnessed an increase in enthusiasm from smart money lately. Our calculations also showed that ALLE isn’t among the 30 most popular stocks among hedge funds.

According to most market participants, hedge funds are viewed as unimportant, outdated investment vehicles of the past. While there are more than 8,000 funds with their doors open today, Our researchers hone in on the elite of this group, around 700 funds. It is estimated that this group of investors preside over the lion’s share of all hedge funds’ total capital, and by following their finest picks, Insider Monkey has uncovered many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

David Blood

We’re going to take a look at the new hedge fund action surrounding Allegion plc (NYSE:ALLE).

How are hedge funds trading Allegion plc (NYSE:ALLE)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in ALLE at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ALLE_dec2018

Among these funds, Generation Investment Management held the most valuable stake in Allegion plc (NYSE:ALLE), which was worth $412.7 million at the end of the third quarter. On the second spot was Intermede Investment Partners which amassed $54 million worth of shares. Moreover, Echo Street Capital Management, Adage Capital Management, and Scopus Asset Management were also bullish on Allegion plc (NYSE:ALLE), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, some big names have jumped into Allegion plc (NYSE:ALLE) headfirst. Scopus Asset Management, managed by Alexander Mitchell, established the most valuable position in Allegion plc (NYSE:ALLE). Scopus Asset Management had $9.5 million invested in the company at the end of the quarter. Ilya Boroditsky’s Precision Path Capital also made a $3.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Matthew Hulsizer’s PEAK6 Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s check out hedge fund activity in other stocks similar to Allegion plc (NYSE:ALLE). These stocks are Qiagen NV (NASDAQ:QGEN), Equity Lifestyle Properties, Inc. (NYSE:ELS), Formula One Group (NASDAQ:FWONK), and FactSet Research Systems Inc. (NYSE:FDS). All of these stocks’ market caps resemble ALLE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
QGEN 24 415251 2
ELS 14 528054 0
FWONK 39 2195969 0
FDS 17 208884 -1
Average 23.5 837040 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $837 million. That figure was $554 million in ALLE’s case. Formula One Group (NASDAQ:FWONK) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 14 bullish hedge fund positions. Allegion plc (NYSE:ALLE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FWONK might be a better candidate to consider a long position.

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

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