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Hedge Funds Are Buying Adecoagro SA (AGRO)

Asma UL Husna

In this article we will check out the progression of hedge fund sentiment towards Adecoagro SA (NYSE:AGRO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Adecoagro SA (NYSE:AGRO) was in 14 hedge funds' portfolios at the end of the first quarter of 2020. AGRO investors should be aware of an increase in support from the world's most elite money managers in recent months. There were 12 hedge funds in our database with AGRO positions at the end of the previous quarter. Our calculations also showed that AGRO isn't among the 30 most popular stocks among hedge funds (click for Q1 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 methods market participants have at their disposal to size up their holdings. Some of the most under-the-radar methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat the broader indices by a healthy amount (see the details here).

[caption id="attachment_221400" align="aligncenter" width="392"] Crispin Odey of Odey Asset Management Group[/caption]

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to analyze the latest hedge fund action encompassing Adecoagro SA (NYSE:AGRO).

How have hedgies been trading Adecoagro SA (NYSE:AGRO)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in AGRO a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, William Duhamel's Route One Investment Company has the number one position in Adecoagro SA (NYSE:AGRO), worth close to $56.2 million, accounting for 1.8% of its total 13F portfolio. The second most bullish fund manager is EMS Capital, led by Edmond M. Safra, holding a $43.8 million position; 4.5% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain D. E. Shaw's D E Shaw, Ron Mass's Almitas Capital and Crispin Odey's Odey Asset Management Group. In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Adecoagro SA (NYSE:AGRO), around 5.85% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, earmarking 4.54 percent of its 13F equity portfolio to AGRO.

With a general bullishness amongst the heavyweights, some big names have jumped into Adecoagro SA (NYSE:AGRO) headfirst. Moon Capital, managed by John W. Moon, initiated the most valuable position in Adecoagro SA (NYSE:AGRO). Moon Capital had $1.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner's Engineers Gate Manager, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Donald Sussman's Paloma Partners.

Let's check out hedge fund activity in other stocks similar to Adecoagro SA (NYSE:AGRO). These stocks are Diamond Eagle Acquisition Corp. (NASDAQ:DEACU), Accelerate Diagnostics Inc (NASDAQ:AXDX), OMNOVA Solutions Inc. (NYSE:OMN), and Uxin Limited (NASDAQ:UXIN). This group of stocks' market caps resemble AGRO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DEACU,35,172599,12 AXDX,9,25259,2 OMN,20,89401,3 UXIN,5,12443,1 Average,17.25,74926,4.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $114 million in AGRO's case. Diamond Eagle Acquisition Corp. (NASDAQ:DEACU) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 5 bullish hedge fund positions. Adecoagro SA (NYSE:AGRO) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately AGRO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AGRO investors were disappointed as the stock returned 13.6% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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