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Bunge Limited (BG) vs. Top 20 Hedge Fund Stocks in 2019

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Bunge Limited (NYSE:BG).

Is Bunge Limited (NYSE:BG) a superb stock to buy now? Prominent investors are in a bullish mood. The number of bullish hedge fund bets advanced by 3 in recent months. Our calculations also showed that BG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings). BG was in 34 hedge funds' portfolios at the end of September. There were 31 hedge funds in our database with BG positions at the end of the previous quarter.

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_30621" align="alignnone" width="600"] Cliff Asness of AQR Capital Management[/caption]

AQR CAPITAL MANAGEMENT

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a look at the new hedge fund action regarding Bunge Limited (NYSE:BG).

How have hedgies been trading Bunge Limited (NYSE:BG)?

Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BG over the last 17 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Is BG A Good Stock To Buy?

More specifically, AQR Capital Management was the largest shareholder of Bunge Limited (NYSE:BG), with a stake worth $126.1 million reported as of the end of September. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $100.8 million. Moore Global Investments, Citadel Investment Group, and Renaissance Technologies 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 Litespeed Management allocated the biggest weight to Bunge Limited (NYSE:BG), around 6.85% of its 13F portfolio. Harvest Capital Strategies is also relatively very bullish on the stock, dishing out 4.23 percent of its 13F equity portfolio to BG.

With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. GLG Partners, managed by Noam Gottesman, initiated the most outsized position in Bunge Limited (NYSE:BG). GLG Partners had $25 million invested in the company at the end of the quarter. Michael Kharitonov and Jon David McAuliffe's Voleon Capital also initiated a $2.5 million position during the quarter. The following funds were also among the new BG investors: David Harding's Winton Capital Management, Louis Navellier's Navellier & Associates, and David Andre and Astro Teller's Cerebellum Capital.

Let's now review hedge fund activity in other stocks similar to Bunge Limited (NYSE:BG). We will take a look at Zayo Group Holdings Inc (NYSE:ZAYO), Alaska Air Group, Inc. (NYSE:ALK), Pilgrim's Pride Corporation (NASDAQ:PPC), and ICON Public Limited Company (NASDAQ:ICLR). This group of stocks' market caps resemble BG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZAYO,50,1997124,-9 ALK,31,486037,9 PPC,24,264319,5 ICLR,20,613069,1 Average,31.25,840137,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was $580 million in BG's case. Zayo Group Holdings Inc (NYSE:ZAYO) is the most popular stock in this table. On the other hand ICON Public Limited Company (NASDAQ:ICLR) is the least popular one with only 20 bullish hedge fund positions. Bunge Limited (NYSE:BG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately BG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BG were disappointed as the stock returned 10.6% in 2019 (through December 23rd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Disclosure: None. This article was originally published at Insider Monkey.

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