The market has been volatile in the fourth quarter as the Federal Reserve continued its rate hikes to normalize the interest rates. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, and the funds' movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of The Andersons, Inc. (NASDAQ:ANDE) and find out how it is affected by hedge funds' moves.
Is The Andersons, Inc. (NASDAQ:ANDE) a healthy stock for your portfolio? Investors who are in the know are in a bearish mood. The number of bullish hedge fund positions retreated by 2 recently. Our calculations also showed that ande isn't among the 30 most popular stocks among hedge funds. ANDE was in 6 hedge funds' portfolios at the end of December. There were 8 hedge funds in our database with ANDE holdings at the end of the previous quarter.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to go over the latest hedge fund action surrounding The Andersons, Inc. (NASDAQ:ANDE).
Hedge fund activity in The Andersons, Inc. (NASDAQ:ANDE)
At Q4's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ANDE over the last 14 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.
Among these funds, Renaissance Technologies held the most valuable stake in The Andersons, Inc. (NASDAQ:ANDE), which was worth $16.9 million at the end of the fourth quarter. On the second spot was Carlson Capital which amassed $11.4 million worth of shares. Moreover, Rutabaga Capital Management, Millennium Management, and D E Shaw were also bullish on The Andersons, Inc. (NASDAQ:ANDE), allocating a large percentage of their portfolios to this stock.
Due to the fact that The Andersons, Inc. (NASDAQ:ANDE) has experienced falling interest from the aggregate hedge fund industry, logic holds that there were a few money managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Ken Griffin's Citadel Investment Group dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $0.3 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also said goodbye to its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to The Andersons, Inc. (NASDAQ:ANDE). These stocks are OFG Bancorp (NYSE:OFG), Star Bulk Carriers Corp. (NASDAQ:SBLK), Sandstorm Gold Ltd. (NYSE:SAND), and Milacron Holdings Corp (NYSE:MCRN). This group of stocks' market valuations are similar to ANDE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OFG,17,59845,6 SBLK,19,456049,3 SAND,9,42972,-1 MCRN,22,56001,5 Average,16.75,153717,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $47 million in ANDE's case. Milacron Holdings Corp (NYSE:MCRN) is the most popular stock in this table. On the other hand Sandstorm Gold Ltd. (NYSE:SAND) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks The Andersons, Inc. (NASDAQ:ANDE) is even less popular than SAND. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ANDE wasn't nearly as popular as these 15 stock and hedge funds that were betting on ANDE were disappointed as the stock returned 9.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.