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After several tireless days we have finished crunching the numbers from nearly 817 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 September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Andersons, Inc. (NASDAQ:ANDE).
Is ANDE a good stock to buy now? ANDE investors should pay attention to an increase in activity from the world's largest hedge funds in recent months. The Andersons, Inc. (NASDAQ:ANDE) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that ANDE isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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.
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a glance at the fresh hedge fund action encompassing The Andersons, Inc. (NASDAQ:ANDE).
Do Hedge Funds Think ANDE Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ANDE over the last 21 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in The Andersons, Inc. (NASDAQ:ANDE), which was worth $5.5 million at the end of the third quarter. On the second spot was Rutabaga Capital Management which amassed $4.6 million worth of shares. D E Shaw, Citadel Investment Group, and Marshall Wace LLP 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 Rutabaga Capital Management allocated the biggest weight to The Andersons, Inc. (NASDAQ:ANDE), around 2.58% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, dishing out 0.35 percent of its 13F equity portfolio to ANDE.
As industrywide interest jumped, specific money managers have jumped into The Andersons, Inc. (NASDAQ:ANDE) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in The Andersons, Inc. (NASDAQ:ANDE). Marshall Wace LLP had $1.4 million invested in the company at the end of the quarter. Mark Broach's Manatuck Hill Partners also initiated a $0.8 million position during the quarter. The following funds were also among the new ANDE investors: Matthew Hulsizer's PEAK6 Capital Management, Peter Muller's PDT Partners, and Donald Sussman's Paloma Partners.
Let's now review hedge fund activity in other stocks similar to The Andersons, Inc. (NASDAQ:ANDE). These stocks are Colony Credit Real Estate, Inc. (NYSE:CLNC), Neenah Inc. (NYSE:NP), Clearwater Paper Corp (NYSE:CLW), ImmunoGen, Inc. (NASDAQ:IMGN), Betterware de Mexico, S.A. de C.V. (NASDAQ:BWMX), Jumia Technologies AG (NYSE:JMIA), and Precigen, Inc. (NASDAQ:PGEN). All of these stocks' market caps are closest to ANDE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLNC,10,37346,4 NP,11,21432,-2 CLW,13,50476,-1 IMGN,18,129732,-2 BWMX,2,4322,0 JMIA,9,13534,1 PGEN,12,36166,-3 Average,10.7,41858,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $25 million in ANDE's case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Betterware de Mexico, S.A. de C.V. (NASDAQ:BWMX) is the least popular one with only 2 bullish hedge fund positions. The Andersons, Inc. (NASDAQ:ANDE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANDE is 77.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ANDE as the stock returned 18.6% since the end of Q3 (through 12/14) 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.