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These Hedge Funds Misjudged Fresh Del Monte Produce Inc (FDP)

Nina Todic

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Fresh Del Monte Produce Inc (NYSE:FDP) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is Fresh Del Monte Produce Inc (NYSE:FDP) a buy, sell, or hold? Money managers are in a bearish mood. The number of bullish hedge fund bets dropped by 3 recently. Our calculations also showed that FDP isn't among the 30 most popular stocks among hedge funds (see the video below). FDP was in 11 hedge funds' portfolios at the end of the second quarter of 2019. There were 14 hedge funds in our database with FDP positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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. We're going to analyze the key hedge fund action surrounding Fresh Del Monte Produce Inc (NYSE:FDP).

What have hedge funds been doing with Fresh Del Monte Produce Inc (NYSE:FDP)?

At Q2's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in FDP over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with FDP Positions
No of Hedge Funds with FDP Positions

Among these funds, Renaissance Technologies held the most valuable stake in Fresh Del Monte Produce Inc (NYSE:FDP), which was worth $30.5 million at the end of the second quarter. On the second spot was Royce & Associates which amassed $5.1 million worth of shares. Moreover, Citadel Investment Group, AQR Capital Management, and GLG Partners were also bullish on Fresh Del Monte Produce Inc (NYSE:FDP), allocating a large percentage of their portfolios to this stock.

Seeing as Fresh Del Monte Produce Inc (NYSE:FDP) has faced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few money managers who sold off their full holdings heading into Q3. It's worth mentioning that Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dumped the biggest position of the "upper crust" of funds tracked by Insider Monkey, comprising about $1 million in call options, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dumped about $0.4 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to Fresh Del Monte Produce Inc (NYSE:FDP). We will take a look at NextGen Healthcare, Inc. (NASDAQ:NXGN), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), TPG Specialty Lending Inc (NYSE:TSLX), and AAR Corp. (NYSE:AIR). This group of stocks' market values resemble FDP's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXGN,14,46230,1 SBCF,6,42244,-2 TSLX,10,61496,-2 AIR,22,117189,-1 Average,13,66790,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $42 million in FDP's case. AAR Corp. (NYSE:AIR) is the most popular stock in this table. On the other hand Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the least popular one with only 6 bullish hedge fund positions. Fresh Del Monte Produce Inc (NYSE:FDP) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on FDP as the stock returned 26.8% during the same time frame and outperformed the market by an even larger margin.

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

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