Textron Inc. (TXT): Hedge Funds Are Snapping Up

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 June. 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 Textron Inc. (NYSE:TXT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Textron Inc. (NYSE:TXT) investors should pay attention to an increase in enthusiasm from smart money lately. Textron Inc. (NYSE:TXT) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that TXT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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. Now let’s take a gander at the key hedge fund action regarding Textron Inc. (NYSE:TXT).

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

At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the first quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in TXT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Pzena Investment Management was the largest shareholder of Textron Inc. (NYSE:TXT), with a stake worth $533.4 million reported as of the end of June. Trailing Pzena Investment Management was Adage Capital Management, which amassed a stake valued at $159.6 million. GAMCO Investors, AQR Capital Management, and D E Shaw 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 Barington Capital Group allocated the biggest weight to Textron Inc. (NYSE:TXT), around 8.42% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 2.08 percent of its 13F equity portfolio to TXT.

As aggregate interest increased, key hedge funds were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), initiated the most valuable position in Textron Inc. (NYSE:TXT). Schonfeld Strategic Advisors had $16.4 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $4.7 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Joel Greenblatt’s Gotham Asset Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s also examine hedge fund activity in other stocks similar to Textron Inc. (NYSE:TXT). We will take a look at Discovery Inc. (NASDAQ:DISCA), Enel Americas S.A. (NYSE:ENIA), argenx SE (NASDAQ:ARGX), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Liberty Global plc (NASDAQ:LBTYA), News Corp (NASDAQ:NWSA), and James Hardie Industries plc (NYSE:JHX). All of these stocks’ market caps match TXT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $760 million. That figure was $962 million in TXT’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Textron Inc. (NYSE:TXT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TXT is 49.1. 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 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% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on TXT as the stock returned 8.5% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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