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Hedge Funds Are Crazy About Canadian National Railway Company (CNI)

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Canadian National Railway Company (NYSE:CNI).

Is Canadian National Railway Company (NYSE:CNI) a buy here? Hedge funds were taking a bullish view. The number of bullish hedge fund bets increased by 4 recently. Canadian National Railway Company (NYSE:CNI) was in 40 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CNI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 36 hedge funds in our database with CNI positions at the end of the first quarter.

In the financial world there are a large number of methods investors employ to size up stocks. A couple of the best methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can beat their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Billionaire David Siegel's Top 10 Stock Picks
Billionaire David Siegel's Top 10 Stock Picks

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to take a peek at the new hedge fund action encompassing Canadian National Railway Company (NYSE:CNI).

Do Hedge Funds Think CNI Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in CNI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, TCI Fund Management held the most valuable stake in Canadian National Railway Company (NYSE:CNI), which was worth $3176.5 million at the end of the second quarter. On the second spot was Bill & Melinda Gates Foundation Trust which amassed $1467.7 million worth of shares. Two Sigma Advisors, Pentwater Capital Management, and Citadel Investment Group 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 TCI Fund Management allocated the biggest weight to Canadian National Railway Company (NYSE:CNI), around 7.92% of its 13F portfolio. Bill & Melinda Gates Foundation Trust is also relatively very bullish on the stock, setting aside 6.15 percent of its 13F equity portfolio to CNI.

As one would reasonably expect, key money managers have been driving this bullishness. Pentwater Capital Management, managed by Matthew Halbower, assembled the largest call position in Canadian National Railway Company (NYSE:CNI). Pentwater Capital Management had $74.9 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also initiated a $56.7 million position during the quarter. The following funds were also among the new CNI investors: Israel Englander's Millennium Management, Greg Poole's Echo Street Capital Management, and Paul Tudor Jones's Tudor Investment Corp.

Let's check out hedge fund activity in other stocks similar to Canadian National Railway Company (NYSE:CNI). These stocks are Truist Financial Corporation (NYSE:TFC), Activision Blizzard, Inc. (NASDAQ:ATVI), CSX Corporation (NASDAQ:CSX), The Sherwin-Williams Company (NYSE:SHW), Coupang, Inc. (NYSE:CPNG), Equinix, Inc. (REIT) (NASDAQ:EQIX), and Snowflake Inc (NYSE:SNOW). This group of stocks' market caps are closest to CNI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TFC,39,1019267,3 ATVI,78,3651606,2 CSX,56,4223857,3 SHW,49,2028984,-2 CPNG,33,18042813,-7 EQIX,33,1266516,-8 SNOW,70,12507692,-1 Average,51.1,6105819,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.1 hedge funds with bullish positions and the average amount invested in these stocks was $6106 million. That figure was $5310 million in CNI's case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 33 bullish hedge fund positions. Canadian National Railway Company (NYSE:CNI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNI is 46.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on CNI as the stock returned 10.3% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.

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