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Fresh Del Monte Produce Inc (FDP): Are Hedge Funds Right About This Stock?

Nina Todic

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Fresh Del Monte Produce Inc (NYSE:FDP).

Fresh Del Monte Produce Inc (NYSE:FDP) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Global Net Lease, Inc. (NYSE:GNL), Dillard's, Inc. (NYSE:DDS), and Mobile Mini Inc (NASDAQ:MINI) to gather more data points. Our calculations also showed that FDP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

If you'd ask most market participants, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our experts look at the aristocrats of this group, around 750 funds. These hedge fund managers command the majority of the hedge fund industry's total capital, and by monitoring their unrivaled investments, Insider Monkey has unsheathed a few investment strategies that have historically beaten the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]

Chuck Royce
Chuck Royce

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to view the new hedge fund action encompassing Fresh Del Monte Produce Inc (NYSE:FDP).

How have hedgies been trading Fresh Del Monte Produce Inc (NYSE:FDP)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FDP over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Fresh Del Monte Produce Inc (NYSE:FDP), with a stake worth $36 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $6.5 million. Citadel Investment Group, Arrowstreet Capital, and Algert Coldiron Investors 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 Algert Coldiron Investors allocated the biggest weight to Fresh Del Monte Produce Inc (NYSE:FDP), around 0.55% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.19 percent of its 13F equity portfolio to FDP.

Judging by the fact that Fresh Del Monte Produce Inc (NYSE:FDP) has experienced a decline in interest from hedge fund managers, it's safe to say that there was a specific group of hedge funds that slashed their entire stakes heading into Q4. It's worth mentioning that Noam Gottesman's GLG Partners dumped the biggest position of the 750 funds tracked by Insider Monkey, worth close to $0.6 million in stock, and Thomas Bailard's Bailard Inc was right behind this move, as the fund dumped about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks similar to Fresh Del Monte Produce Inc (NYSE:FDP). These stocks are Global Net Lease, Inc. (NYSE:GNL), Dillard's, Inc. (NYSE:DDS), Mobile Mini Inc (NASDAQ:MINI), and Gray Television, Inc. (NYSE:GTN). All of these stocks' market caps resemble FDP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNL,12,74097,4 DDS,20,266166,0 MINI,20,194376,5 GTN,23,206495,-2 Average,18.75,185284,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $53 million in FDP's case. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand Global Net Lease, Inc. (NYSE:GNL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Fresh Del Monte Produce Inc (NYSE:FDP) is even less popular than GNL. Hedge funds dodged a bullet by taking a bearish stance towards FDP. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FDP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FDP investors were disappointed as the stock returned -3.9% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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