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Were Hedge Funds Right About Souring On Amphenol Corporation (APH) ?

Is Amphenol Corporation (NYSE:APH) a bargain? The best stock pickers are selling. The number of bullish hedge fund positions were trimmed by 4 in recent months. Our calculations also showed that APH isn’t among the 30 most popular stocks among hedge funds. APH was in 21 hedge funds’ portfolios at the end of December. There were 25 hedge funds in our database with APH positions at the end of the previous quarter.

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.

GOTHAM ASSET MANAGEMENT

We’re going to go over the recent hedge fund action surrounding Amphenol Corporation (NYSE:APH).

How have hedgies been trading Amphenol Corporation (NYSE:APH)?

At Q4’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in APH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

APH

Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the number one position in Amphenol Corporation (NYSE:APH), worth close to $284 million, comprising 2.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, managed by Jim Simons, which holds a $55.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism comprise D. E. Shaw’s D E Shaw, Noam Gottesman’s GLG Partners and Joel Greenblatt’s Gotham Asset Management.

Seeing as Amphenol Corporation (NYSE:APH) has witnessed falling interest from hedge fund managers, logic holds that there was a specific group of funds who were dropping their entire stakes heading into Q3. Interestingly, Steve Cohen’s Point72 Asset Management sold off the largest investment of the 700 funds tracked by Insider Monkey, comprising close to $22.6 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also cut its stock, about $6.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Amphenol Corporation (NYSE:APH) but similarly valued. These stocks are Ferrari N.V. (NYSE:RACE), Equity Residential (NYSE:EQR), Corning Incorporated (NYSE:GLW), and MPLX LP (NYSE:MPLX). All of these stocks’ market caps are closest to APH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RACE 28 854998 2
EQR 23 290037 0
GLW 30 456523 3
MPLX 11 331776 0
Average 23 483334 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $483 million. That figure was $479 million in APH’s case. Corning Incorporated (NYSE:GLW) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 11 bullish hedge fund positions. Amphenol Corporation (NYSE:APH) 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. 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 APH, though not to the same extent, as the stock returned 17.8% and outperformed the market as well.

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

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