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Were Hedge Funds Right About Buying Linde plc (LIN)?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Linde plc (NYSE:LIN).

Linde plc (NYSE:LIN) was in 37 hedge funds’ portfolios at the end of the fourth quarter of 2018. LIN has seen an increase in enthusiasm from smart money lately. There were 0 hedge funds in our database with LIN holdings at the end of the previous quarter. Our calculations also showed that LIN isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Armitage Egerton Capital

Let’s go over the latest hedge fund action regarding Linde plc (NYSE:LIN).

Hedge fund activity in Linde plc (NYSE:LIN)

At the end of the fourth quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock. Below, you can check out the change in hedge fund sentiment towards LIN over the last 14 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

LIN_mar2019

Among these funds, Egerton Capital Limited held the most valuable stake in Linde plc (NYSE:LIN), which was worth $469.1 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $233.4 million worth of shares. Moreover, Diamond Hill Capital, AQR Capital Management, and Adage Capital Management were also bullish on Linde plc (NYSE:LIN), allocating a large percentage of their portfolios to this stock.

Now, some big names have been driving this bullishness. Egerton Capital Limited, managed by John Armitage, established the largest position in Linde plc (NYSE:LIN). Egerton Capital Limited had $469.1 million invested in the company at the end of the quarter. Robert Pitts’s Steadfast Capital Management also initiated a $233.4 million position during the quarter. The other funds with brand new LIN positions are Ric Dillon’s Diamond Hill Capital, Cliff Asness’s AQR Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Linde plc (NYSE:LIN) but similarly valued. These stocks are Diageo plc (NYSE:DEO), Dell Technologies Inc. (NYSE:DELL), China Petroleum & Chemical Corp (NYSE:SNP), and Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR). This group of stocks’ market values match LIN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DEO 14 891175 -1
DELL 43 2170884 -18
SNP 15 237493 2
PBR 32 1757766 4
Average 26 1264330 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $1264 million. That figure was $1618 million in LIN’s case. Dell Technologies Inc. (NYSE:DELL) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 14 bullish hedge fund positions. Linde plc (NYSE:LIN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on LIN as the stock returned 13.7% and outperformed the market as well.

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

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