Were Hedge Funds Right About Air Products & Chemicals (APD)?
In this article we will analyze whether Air Products & Chemicals, Inc. (NYSE:APD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Air Products & Chemicals, Inc. (NYSE:APD) was in 50 hedge funds' portfolios at the end of December. The all time high for this statistic is 77. APD has experienced an increase in hedge fund sentiment in recent months. There were 49 hedge funds in our database with APD positions at the end of the third quarter. Our calculations also showed that APD isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
To most investors, hedge funds are seen as slow, outdated financial vehicles of years past. While there are more than 8000 funds in operation at the moment, We choose to focus on the leaders of this club, about 850 funds. These money managers control the lion's share of all hedge funds' total asset base, and by keeping an eye on their inimitable picks, Insider Monkey has come up with various investment strategies that have historically beaten the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .
James Dinan of York Capital Management
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 we're going to take a glance at the latest hedge fund action regarding Air Products & Chemicals, Inc. (NYSE:APD).
Do Hedge Funds Think APD Is A Good Stock To Buy Now?
At the end of December, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in APD over the last 22 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of Air Products & Chemicals, Inc. (NYSE:APD), with a stake worth $208.4 million reported as of the end of December. Trailing Millennium Management was Viking Global, which amassed a stake valued at $173.9 million. Suvretta Capital Management, Adage 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 Bronson Point Partners allocated the biggest weight to Air Products & Chemicals, Inc. (NYSE:APD), around 5.95% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 4.83 percent of its 13F equity portfolio to APD.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, assembled the most valuable position in Air Products & Chemicals, Inc. (NYSE:APD). Viking Global had $173.9 million invested in the company at the end of the quarter. James Dinan's York Capital Management also made a $16 million investment in the stock during the quarter. The other funds with brand new APD positions are Larry Foley and Paul Farrell's Bronson Point Partners, Michael Gelband's ExodusPoint Capital, and Paul Tudor Jones's Tudor Investment Corp.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Air Products & Chemicals, Inc. (NYSE:APD) but similarly valued. These stocks are Norfolk Southern Corp. (NYSE:NSC), Spotify Technology S.A. (NYSE:SPOT), General Motors Company (NYSE:GM), Marsh & McLennan Companies, Inc. (NYSE:MMC), VMware, Inc. (NYSE:VMW), Atlassian Corporation Plc (NASDAQ:TEAM), and The Progressive Corporation (NYSE:PGR). All of these stocks' market caps are similar to APD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NSC,44,783686,-3 SPOT,48,2688846,4 GM,70,6332871,10 MMC,43,1747012,8 VMW,35,405815,4 TEAM,69,4932963,21 PGR,48,1744884,1 Average,51,2662297,6.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $2662 million. That figure was $1282 million in APD's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 35 bullish hedge fund positions. Air Products & Chemicals, Inc. (NYSE:APD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APD is 46.9. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and surpassed the market again by 1.6 percentage points. Unfortunately APD wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); APD investors were disappointed as the stock returned 6.1% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Get real-time email alerts: Follow Air Products & Chemicals Inc (NYSE:APD)
Disclosure: None. This article was originally published at Insider Monkey.
Related Content
