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In this article you are going to find out whether hedge funds think Corteva, Inc. (NYSE:CTVA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is CTVA a good stock to buy? Corteva, Inc. (NYSE:CTVA) was in 34 hedge funds' portfolios at the end of June. The all time high for this statistic is 39. CTVA has seen a decrease in hedge fund sentiment lately. There were 35 hedge funds in our database with CTVA positions at the end of the first quarter. Our calculations also showed that CTVA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
To the average investor there are a lot of signals investors put to use to appraise their holdings. Some of the most innovative signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the S&P 500 by a solid amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Larry Robbins of Glenview Capital
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Do Hedge Funds Think CTVA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the first quarter of 2020. On the other hand, there were a total of 39 hedge funds with a bullish position in CTVA a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Corteva, Inc. (NYSE:CTVA) was held by Starboard Value LP, which reported holding $425.1 million worth of stock at the end of June. It was followed by Eminence Capital with a $313.2 million position. Other investors bullish on the company included Sessa Capital, Glenview Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to Corteva, Inc. (NYSE:CTVA), around 8.35% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, setting aside 6.01 percent of its 13F equity portfolio to CTVA.
Seeing as Corteva, Inc. (NYSE:CTVA) has witnessed a decline in interest from the smart money, logic holds that there exists a select few hedgies who were dropping their entire stakes by the end of the second quarter. At the top of the heap, Javier Velazquez's Albar Capital dropped the biggest investment of the "upper crust" of funds followed by Insider Monkey, valued at close to $22.8 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners was right behind this move, as the fund cut about $2.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds by the end of the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Corteva, Inc. (NYSE:CTVA) but similarly valued. These stocks are D.R. Horton, Inc. (NYSE:DHI), Williams Companies, Inc. (NYSE:WMB), Mettler-Toledo International Inc. (NYSE:MTD), ArcelorMittal (NYSE:MT), V.F. Corporation (NYSE:VFC), AutoZone, Inc. (NYSE:AZO), and Datadog, Inc. (NASDAQ:DDOG). This group of stocks' market valuations resemble CTVA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DHI,45,1886955,-5 WMB,39,551010,5 MTD,35,1267774,8 MT,22,1044502,1 VFC,32,1005658,1 AZO,34,545700,0 DDOG,56,3235244,12 Average,37.6,1362406,3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.6 hedge funds with bullish positions and the average amount invested in these stocks was $1362 million. That figure was $1284 million in CTVA's case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 22 bullish hedge fund positions. Corteva, Inc. (NYSE:CTVA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTVA is 47.8. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 21.8% in 2021 through October 11th and surpassed the market again by 4.4 percentage points. Unfortunately CTVA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CTVA investors were disappointed as the stock returned -4% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.