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Do Hedge Funds Love Deere & Company (DE)?

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·6 min read
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We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article, we look at what those funds think of Deere & Company (NYSE:DE) based on that data.

Deere & Company (NYSE:DE) has seen an increase in activity from the world's largest hedge funds of late. Deere & Company (NYSE:DE) was in 52 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 54. There were 51 hedge funds in our database with DE positions at the end of the first quarter. Our calculations also showed that DE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To the average investor there are dozens of signals stock market investors have at their disposal to grade stocks. Some of the best signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outpace the S&P 500 by a significant amount (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 .

Tom Gayner
Tom Gayner

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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 let's check out the recent hedge fund action regarding Deere & Company (NYSE:DE).

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

At Q2's end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in DE over the last 24 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Deere & Company (NYSE:DE) was held by Viking Global, which reported holding $454.1 million worth of stock at the end of June. It was followed by Markel Gayner Asset Management with a $266.6 million position. Other investors bullish on the company included Citadel Investment Group, Diamond Hill Capital, and Impax Asset Management. In terms of the portfolio weights assigned to each position Horseman Capital Management allocated the biggest weight to Deere & Company (NYSE:DE), around 7.27% of its 13F portfolio. Engine No. 1 LLC is also relatively very bullish on the stock, earmarking 5.5 percent of its 13F equity portfolio to DE.

As aggregate interest increased, some big names have jumped into Deere & Company (NYSE:DE) headfirst. Bridgewater Associates, managed by Ray Dalio, created the largest position in Deere & Company (NYSE:DE). Bridgewater Associates had $26.6 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $21.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Brad Farber's Atika Capital, and Dan Kozlowski's Plaisance Capital.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Deere & Company (NYSE:DE) but similarly valued. These stocks are CVS Health Corporation (NYSE:CVS), Intuitive Surgical, Inc. (NASDAQ:ISRG), ServiceNow Inc (NYSE:NOW), Snap Inc. (NYSE:SNAP), Lockheed Martin Corporation (NYSE:LMT), GlaxoSmithKline plc (NYSE:GSK), and S&P Global Inc. (NYSE:SPGI). 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 CVS,67,1355477,5 ISRG,60,3475820,7 NOW,91,7011424,-7 SNAP,64,5399955,-9 LMT,58,1565723,8 GSK,28,1466364,3 SPGI,71,7278360,5 Average,62.7,3936160,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 62.7 hedge funds with bullish positions and the average amount invested in these stocks was $3936 million. That figure was $2174 million in DE's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 28 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 53.9. 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. 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 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 22.9% in 2021 through October 1st and surpassed the market again by 5.6 percentage points. Unfortunately DE wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DE investors were disappointed as the stock returned -2.7% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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