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Hedge Funds Are Selling AGCO Corporation (AGCO)

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is AGCO Corporation (NYSE:AGCO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is AGCO Corporation (NYSE:AGCO) going to take off soon? Money managers were turning less bullish. The number of bullish hedge fund bets dropped by 4 in recent months. AGCO Corporation (NYSE:AGCO) was in 36 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that AGCO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 40 hedge funds in our database with AGCO holdings at the end of December.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). 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

Noam Gottesman of GLG Partners

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 battery 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 take a look at the fresh hedge fund action surrounding AGCO Corporation (NYSE:AGCO).

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

At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AGCO over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Cliff Asness's AQR Capital Management has the biggest position in AGCO Corporation (NYSE:AGCO), worth close to $103.5 million, accounting for 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $51.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Renaissance Technologies, Noam Gottesman's GLG Partners and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Horseman Capital Management allocated the biggest weight to AGCO Corporation (NYSE:AGCO), around 10.15% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, designating 8.16 percent of its 13F equity portfolio to AGCO.

Seeing as AGCO Corporation (NYSE:AGCO) has experienced a decline in interest from the smart money, logic holds that there is a sect of hedge funds who sold off their full holdings by the end of the first quarter. At the top of the heap, Ryan Caldwell's Chiron Investment Management dumped the largest investment of the "upper crust" of funds followed by Insider Monkey, comprising close to $15.2 million in stock, and Clint Murray's Lodge Hill Capital was right behind this move, as the fund said goodbye to about $15.1 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks similar to AGCO Corporation (NYSE:AGCO). We will take a look at Ozon Holdings PLC (NASDAQ:OZON), Steel Dynamics, Inc. (NASDAQ:STLD), Five Below Inc (NASDAQ:FIVE), Iron Mountain Incorporated (NYSE:IRM), Repligen Corporation (NASDAQ:RGEN), Trex Company, Inc. (NYSE:TREX), and CBOE Global Markets Inc (NASDAQ:CBOE). This group of stocks' market valuations resemble AGCO's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OZON,17,136135,-4 STLD,26,570961,-1 FIVE,43,1010018,1 IRM,16,56371,-2 RGEN,38,1039405,1 TREX,23,203682,-7 CBOE,33,767928,-5 Average,28,540643,-2.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $541 million. That figure was $553 million in AGCO's case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 16 bullish hedge fund positions. AGCO Corporation (NYSE:AGCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGCO is 65. 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 positive signal but 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately AGCO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AGCO were disappointed as the stock returned -5.9% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.

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