Johnson Controls, Inc. (JCI): Insiders Aren’t Crazy About It But Hedge Funds Love It

Johnson Controls, Inc. (NYSE:JCI) recently signed a memorandum of understanding with Hitachi Ltd. and Hitachi Appliances, Inc. to acquire a 60-percent ownership stake in Hitachi Appliances’ global air-conditioning business. The joint venture between Johnson Controls, Inc. and Hitachi is expected to be operational in 2014 and excludes some assets of Hitachi including Japanese sales and service operations.

This partnership will not only add to the existing technology portfolio of Johnson Controls Inc. (NYSE:JCI), but also allow it to become the world’s largest commercial air-conditioning provider.

Johnson Controls, Inc. (NYSE:JCI)

What does the smart money think about Johnson Controls, Inc. (NYSE:JCI)?

At the end of the third quarter, 45 hedge funds tracked by Insider Monkey were long in this stock, an increase of 61 percent from the previous quarter.

As per comprehensive data from Insider Monkey, Sandy Nairn of Edinburgh Partners had the largest position in Johnson Controls, Inc. (NYSE:JCI), worth $143.2 million, comprising 11.1 percent of its total investment portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $133.5-million position; accounting for 0.4 percent of its total portfolio. Other hedgies that are bullish include Donald Chiboucis of Columbus Circle Investors and Alexander Mitchell of Scopus Asset Management.

As one would reasonably expect, key hedge funds have jumped into Johnson Controls, Inc. (NYSE:JCI) headfirst. Columbus Circle Investors, managed by Donald Chiboucis, staked up its investment in Johnson Controls, Inc. (NYSE:JCI) to $91.9 million at the end of the quarter. Christopher Medlock James of Partner Fund Management also made a $39.6-million investment in the stock during the quarter. The other fund managers with new positions in the stock are Dmitry Balyasny of Balyasny Asset Management, Peter Muller of PDT Partners and Larry Foley and Paul Farrell of Bronson Point Partners.

How have insiders been trading Johnson Controls, Inc. (NYSE:JCI)?

In the last 6 months, Johnson Controls, Inc. (NYSE:JCI) had zero unique insiders buying and four insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Johnson Controls, Inc. (NYSE:JCI). These stocks are LKQ Corporation (NASDAQ:LKQ), TRW Automotive Holdings Corp. (NYSE:TRW), Autoliv Inc. (NYSE:ALV), BorgWarner Inc. (NYSE:BWA), and Delphi Automotive PLC (NYSE:DLPH). This group of stocks is in the auto parts industry and their market caps match JCI’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
LKQ Corporation (NASDAQ:LKQ) 22 0 4
TRW Automotive Holdings Corp. (NYSE:TRW) 44 0 6
Autoliv Inc. (NYSE:ALV) 12 0 9
BorgWarner Inc. (NYSE:BWA) 26 0 4
Delphi Automotive PLC (NYSE:DLPH) 39 0 5

Among the peers TRW Automotive Holdings Corp. (NYSE:TRW) seems to be an equally interesting investment opportunity among hedgies as Johnson Controls, Inc. (NYSE:JCI). As far insiders selling are concerned the intensity is quite evident in Autoliv Inc. (NYSE:ALV).


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