Was The Smart Money Right About Piling Into Intuit Inc. (INTU)?

In this article you are going to find out whether hedge funds think Intuit Inc. (NASDAQ:INTU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Intuit Inc. (NASDAQ:INTU) was in 68 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 55. This means the bullish number of hedge fund positions in this stock currently reached a brand new all time high. INTU investors should be aware of an increase in hedge fund interest lately. There were 54 hedge funds in our database with INTU holdings at the end of September. Our calculations also showed that INTU isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Third Point

Dan Loeb of Third Point

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to go over the fresh hedge fund action regarding Intuit Inc. (NASDAQ:INTU).

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

Heading into the first quarter of 2021, a total of 68 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INTU over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Intuit Inc. (NASDAQ:INTU) was held by Fundsmith LLP, which reported holding $1742.6 million worth of stock at the end of December. It was followed by Third Point with a $379.9 million position. Other investors bullish on the company included AQR Capital Management, GLG Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Blue Whale Capital allocated the biggest weight to Intuit Inc. (NASDAQ:INTU), around 7.93% of its 13F portfolio. Fundsmith LLP is also relatively very bullish on the stock, earmarking 5.78 percent of its 13F equity portfolio to INTU.

Now, key hedge funds were leading the bulls’ herd. Foxhaven Asset Management, managed by Michael Pausic, assembled the largest position in Intuit Inc. (NASDAQ:INTU). Foxhaven Asset Management had $115.7 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also made a $91.9 million investment in the stock during the quarter. The other funds with brand new INTU positions are Chase Coleman’s Tiger Global Management LLC, Dmitry Balyasny’s Balyasny Asset Management, and Leon Shaulov’s Maplelane Capital.

Let’s go over hedge fund activity in other stocks similar to Intuit Inc. (NASDAQ:INTU). These stocks are The Toronto-Dominion Bank (NYSE:TD), Sea Limited (NYSE:SE), 3M Company (NYSE:MMM), American Tower Corporation (REIT) (NYSE:AMT), The Charles Schwab Corporation (NYSE:SCHW), Lockheed Martin Corporation (NYSE:LMT), and Caterpillar Inc. (NYSE:CAT). All of these stocks’ market caps resemble INTU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TD 22 171021 7
SE 115 10868553 20
MMM 44 1367331 -12
AMT 61 4726391 -1
SCHW 61 4473211 8
LMT 53 2527739 6
CAT 53 4157844 12
Average 58.4 4041727 5.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 58.4 hedge funds with bullish positions and the average amount invested in these stocks was $4042 million. That figure was $4693 million in INTU’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand The Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 22 bullish hedge fund positions. Intuit Inc. (NASDAQ:INTU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INTU is 64.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately INTU wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on INTU were disappointed as the stock returned 6.2% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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