The FTSE100 has not had a recent reputation for excellent returns. However, recent 13F filings indicate that high-powered hedge funds represent an opportunity in the UK.

This in itself is not a reason to buy (or sell) the stock. However, looking at what the sharp money has done may provide a source of ideas worth taking a closer look at.

Ashtead

Dodge & Cox is a value-oriented investment firm. And in the third quarter, the company bought about 2.3 million shares of an industrial equipment leasing company Ashtead (LSE: AHT).

So far, this move is working very well – the company’s shares have increased by 7.5% since the end of September. The main reason is the US election result.

Over 85% of the company’s revenues come from across the Atlantic. This type of geographic focus can be risky, but mighty U.S. industrial activity can be a large boost for a FTSE 100 company.

Demand for industrial equipment is highly cyclical. This means that I believe that the book price (P/B) is a better indicator than the price-to-earnings ratio (P/E) when valuing Ashtead shares.

Ashtead P/B Ratio Nov 2023 – Nov 24

Created in TradingView

Based on this, it can be concluded that the company’s shares reached their lowest level of the year between June and August. So even without a forecast of the election result, it might seem like a good time to buy.

The recent rally saw the indexes return to the upper end of their 12-month range. This is something investors should consider before deciding whether to follow Dodge & Cox’s lead.

Lloyds Banking Group

Maverick Capital opened a position in Lloyds Banking Group (LSE:LLOY) in the third quarter. The company invests in over 200 companies, but there is a reason I find this fascinating.

The company’s stock is currently 4.5% lower than at the end of the third quarter. This happens mainly as a result of a final court judgment Close Brothers in the case of commission for car loans.

Lloyds has significant exposure to this area, but it is nothing modern. What has changed recently is that as a result of the judgment against Close Brothers, the risk of significant liabilities has increased.

Unfortunately, investors will only learn whether Maverick responded to this situation in February. That’s the limitation of 13F filings – they’re only updated quarterly.

This is another reason not to just invest in hedge fund stocks. However, I don’t think this means that information about what hedge funds are buying is completely worthless.

The fact that the company decided to buy Lloyds and not – e.g. Barclays is fascinating to me. If nothing else, it gives me a reason to take a closer look and see if I can figure out why.

Investment ideas

Many investors exploit 13F reports to highlight what Warren Buffett is buying. However, I think there are many influential investors worth paying attention to.

Many of them have recently seen opportunities in FTSE 100 shares. And while that alone isn’t reason enough for me to buy the stock, I don’t mind taking a closer look at it.