We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Deere & Company (NYSE:DE).
Deere & Company (NYSE:DE) investors should pay attention to an increase in support from the world's most elite money managers of late. Our calculations also showed that DE isn't among the 30 most popular stocks among hedge funds.
Today there are a lot of methods investors use to value their holdings. Some of the less utilized methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a superb amount (see the details here).
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's check out the key hedge fund action surrounding Deere & Company (NYSE:DE).
How have hedgies been trading Deere & Company (NYSE:DE)?
Heading into the third quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DE over the last 16 quarters. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Deere & Company (NYSE:DE) was held by Generation Investment Management, which reported holding $789.4 million worth of stock at the end of March. It was followed by Adage Capital Management with a $168.8 million position. Other investors bullish on the company included Markel Gayner Asset Management, Balyasny Asset Management, and GAMCO Investors.
Consequently, specific money managers have jumped into Deere & Company (NYSE:DE) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Deere & Company (NYSE:DE). Balyasny Asset Management had $81.8 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $34 million investment in the stock during the quarter. The other funds with brand new DE positions are Mike Masters's Masters Capital Management, Richard Chilton's Chilton Investment Company, and Gregg Moskowitz's Interval Partners.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Deere & Company (NYSE:DE) but similarly valued. We will take a look at Marsh & McLennan Companies, Inc. (NYSE:MMC), Prologis Inc (NYSE:PLD), Lloyds Banking Group PLC (NYSE:LYG), and EOG Resources Inc (NYSE:EOG). This group of stocks' market caps are closest to DE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MMC,29,741920,0 PLD,24,457047,-1 LYG,8,52501,0 EOG,36,1212228,-3 Average,24.25,615924,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $616 million. That figure was $1583 million in DE's case. EOG Resources Inc (NYSE:EOG) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Deere & Company (NYSE:DE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on DE, though not to the same extent, as the stock returned 2.3% during the third quarter and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.