After several tireless days we have finished crunching the numbers from nearly 900 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 March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Otis Worldwide Corporation (NYSE:OTIS).
Is Otis Worldwide Corporation (NYSE:OTIS) worth your attention right now? Investors who are in the know were reducing their bets on the stock. The number of bullish hedge fund bets decreased by 7 lately. Otis Worldwide Corporation (NYSE:OTIS) was in 52 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 59. Our calculations also showed that OTIS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Ole Andreas Halvorsen of Viking Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind we're going to check out the fresh hedge fund action encompassing Otis Worldwide Corporation (NYSE:OTIS).
Do Hedge Funds Think OTIS Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in OTIS a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in Otis Worldwide Corporation (NYSE:OTIS), which was worth $467.8 million at the end of the fourth quarter. On the second spot was Ako Capital which amassed $378.8 million worth of shares. Deccan Value Advisors, Gates Capital Management, and Suvretta Capital Management 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 Deccan Value Advisors allocated the biggest weight to Otis Worldwide Corporation (NYSE:OTIS), around 14.17% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, earmarking 7.53 percent of its 13F equity portfolio to OTIS.
Due to the fact that Otis Worldwide Corporation (NYSE:OTIS) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few fund managers that elected to cut their entire stakes in the first quarter. At the top of the heap, Zach Petrone's Highside Global Management dropped the largest stake of the 750 funds tracked by Insider Monkey, worth an estimated $17.4 million in stock, and James Dinan's York Capital Management was right behind this move, as the fund said goodbye to about $9.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 7 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Otis Worldwide Corporation (NYSE:OTIS) but similarly valued. These stocks are Valero Energy Corporation (NYSE:VLO), Liberty Broadband Corp (NASDAQ:LBRDA), Liberty Broadband Corp (NASDAQ:LBRDK), Discover Financial Services (NYSE:DFS), First Republic Bank (NYSE:FRC), ViacomCBS Inc. (NASDAQ:VIAC), and Okta, Inc. (NASDAQ:OKTA). This group of stocks' market caps match OTIS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VLO,41,462502,3 LBRDA,23,774868,-3 LBRDK,70,6857308,-10 DFS,45,654294,2 FRC,41,1262066,7 VIAC,89,2349597,45 OKTA,48,1616565,-13 Average,51,1996743,4.4 [/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 $1997 million. That figure was $2751 million in OTIS's case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 23 bullish hedge fund positions. Otis Worldwide Corporation (NYSE:OTIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OTIS is 46.4. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on OTIS as the stock returned 18% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.