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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Deere & Company (NYSE:DE).
Is DE a good stock to buy now? Deere & Company (NYSE:DE) investors should pay attention to an increase in hedge fund sentiment recently. Deere & Company (NYSE:DE) was in 42 hedge funds' portfolios at the end of September. The all time high for this statistic is 51. Our calculations also showed that DE 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.
In the 21st century investor’s toolkit there are tons of gauges market participants can use to value stocks. A couple of the best gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the S&P 500 by a significant amount (see the details here).
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind we're going to take a peek at the latest hedge fund action surrounding Deere & Company (NYSE:DE).
Do Hedge Funds Think DE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from one quarter earlier. On the other hand, there were a total of 41 hedge funds with a bullish position in DE a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Greenhaven Associates held the most valuable stake in Deere & Company (NYSE:DE), which was worth $447.2 million at the end of the third quarter. On the second spot was Markel Gayner Asset Management which amassed $167.5 million worth of shares. Impax Asset Management, Citadel Investment Group, and Diamond Hill Capital 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 Greenhaven Associates allocated the biggest weight to Deere & Company (NYSE:DE), around 9.83% of its 13F portfolio. Iszo Capital is also relatively very bullish on the stock, designating 5.75 percent of its 13F equity portfolio to DE.
Now, specific money managers were breaking ground themselves. Diamond Hill Capital, managed by Ric Dillon, assembled the most valuable position in Deere & Company (NYSE:DE). Diamond Hill Capital had $73.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $18.5 million position during the quarter. The following funds were also among the new DE investors: Brian Sheehy's Iszo Capital, Javier Velazquez's Albar Capital, and Dipak Patel's Alight Capital.
Let's also examine hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). These stocks are Goldman Sachs Group, Inc. (NYSE:GS), Fiserv, Inc. (NASDAQ:FISV), Anthem Inc (NYSE:ANTM), Becton, Dickinson and Company (NYSE:BDX), Equinix Inc (NASDAQ:EQIX), The TJX Companies, Inc. (NYSE:TJX), and Dominion Energy Inc. (NYSE:D). This group of stocks' market caps resemble DE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GS,70,3633681,1 FISV,90,5404170,5 ANTM,65,4505466,-4 BDX,62,1939356,9 EQIX,42,2270352,-7 TJX,78,2853294,6 D,37,967030,4 Average,63.4,3081907,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 63.4 hedge funds with bullish positions and the average amount invested in these stocks was $3082 million. That figure was $1309 million in DE's case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Dominion Energy Inc. (NYSE:D) is the least popular one with only 37 bullish hedge fund positions. Deere & Company (NYSE:DE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DE is 39.4. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on DE as the stock returned 14% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.