The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded Deere & Company (NYSE:DE) based on those filings.
Deere & Company (NYSE:DE) was in 47 hedge funds' portfolios at the end of December. DE investors should pay attention to an increase in hedge fund interest of late. There were 37 hedge funds in our database with DE positions at the end of the previous quarter. Our calculations also showed that DE isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a glance at the recent hedge fund action encompassing Deere & Company (NYSE:DE).
Hedge fund activity in Deere & Company (NYSE:DE)
Heading into the first quarter of 2019, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the second quarter of 2018. By comparison, 49 hedge funds held shares or bullish call options in DE a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Generation Investment Management held the most valuable stake in Deere & Company (NYSE:DE), which was worth $706.1 million at the end of the third quarter. On the second spot was Melvin Capital Management which amassed $277.3 million worth of shares. Moreover, Adage Capital Management, Markel Gayner Asset Management, and Balyasny Asset Management were also bullish on Deere & Company (NYSE:DE), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers were breaking ground themselves. Melvin Capital Management, managed by Gabriel Plotkin, created the most valuable call position in Deere & Company (NYSE:DE). Melvin Capital Management had $39.6 million invested in the company at the end of the quarter. Daniel Sundheim's D1 Capital Partners also initiated a $29.8 million position during the quarter. The following funds were also among the new DE investors: Javier Velazquez's Albar Capital, Ryan Caldwell's Chiron Investment Management, and Richard Chilton's Chilton Investment Company.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Deere & Company (NYSE:DE) but similarly valued. These stocks are General Motors Company (NYSE:GM), The Estee Lauder Companies Inc (NYSE:EL), America Movil SAB de CV (NYSE:AMX), and Dominion Energy, Inc. (NYSE:D). This group of stocks' market valuations resemble DE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GM,60,5275128,-1 EL,33,1159461,-3 AMX,12,244949,2 D,37,1042109,10 Average,35.5,1930412,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.5 hedge funds with bullish positions and the average amount invested in these stocks was $1930 million. That figure was $2093 million in DE's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand America Movil SAB de CV (NYSE:AMX) is the least popular one with only 12 bullish hedge fund positions. Deere & Company (NYSE:DE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately DE wasn't in this group. Hedge funds that bet on DE were disappointed as the stock returned 6.0% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.