The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded General Mills, Inc. (NYSE:GIS) based on those filings.
General Mills, Inc. (NYSE:GIS) shareholders have witnessed a decrease in enthusiasm from smart money lately. Our calculations also showed that GIS 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="600"] Cliff Asness of AQR Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the fresh hedge fund action surrounding General Mills, Inc. (NYSE:GIS).
What does smart money think about General Mills, Inc. (NYSE:GIS)?
Heading into the fourth quarter of 2019, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the second quarter of 2019. On the other hand, there were a total of 32 hedge funds with a bullish position in GIS a year ago. So, let's find out 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 General Mills, Inc. (NYSE:GIS), with a stake worth $302.3 million reported as of the end of September. Trailing Renaissance Technologies was Iridian Asset Management, which amassed a stake valued at $188.2 million. Alkeon Capital Management, AQR Capital Management, and Two Sigma Advisors 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 Harvest Capital Strategies allocated the biggest weight to General Mills, Inc. (NYSE:GIS), around 5.99% of its portfolio. Iridian Asset Management is also relatively very bullish on the stock, setting aside 2.95 percent of its 13F equity portfolio to GIS.
Due to the fact that General Mills, Inc. (NYSE:GIS) has faced declining sentiment from the smart money, logic holds that there exists a select few hedgies that elected to cut their positions entirely last quarter. Interestingly, Israel Englander's Millennium Management sold off the biggest position of all the hedgies tracked by Insider Monkey, valued at about $59 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also sold off its stock, about $19.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let's check out hedge fund activity in other stocks similar to General Mills, Inc. (NYSE:GIS). These stocks are Cognizant Technology Solutions Corp (NASDAQ:CTSH), eBay Inc (NASDAQ:EBAY), The Hershey Company (NYSE:HSY), and Autodesk, Inc. (NASDAQ:ADSK). All of these stocks' market caps are closest to GIS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTSH,40,2368649,7 EBAY,53,3488246,6 HSY,33,1103825,6 ADSK,45,2728142,-11 Average,42.75,2422216,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $2422 million. That figure was $916 million in GIS's case. eBay Inc (NASDAQ:EBAY) is the most popular stock in this table. On the other hand The Hershey Company (NYSE:HSY) is the least popular one with only 33 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GIS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GIS investors were disappointed as the stock returned -2.4% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.