Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Bunge Limited (NYSE:BG).
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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the latest hedge fund action surrounding Bunge Limited (NYSE:BG).
What have hedge funds been doing with Bunge Limited (NYSE:BG)?
At the end of the first quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2018. By comparison, 44 hedge funds held shares or bullish call options in BG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Bunge Limited (NYSE:BG). Citadel Investment Group has a $121.7 million position in the stock, comprising 0.1% of its 13F portfolio. On Citadel Investment Group's heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $100.2 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism contain Jim Simons's Renaissance Technologies, Clint Carlson's Carlson Capital and Steve Cohen's Point72 Asset Management.
Because Bunge Limited (NYSE:BG) has faced falling interest from the smart money, it's safe to say that there were a few hedgies that decided to sell off their full holdings in the third quarter. Intriguingly, Rob Citrone's Discovery Capital Management cut the largest position of all the hedgies tracked by Insider Monkey, valued at close to $54.9 million in stock. Mark Kingdon's fund, Kingdon Capital, also dropped its stock, about $36.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Bunge Limited (NYSE:BG) but similarly valued. We will take a look at Apartment Investment and Management Co. (NYSE:AIV), Gildan Activewear Inc (NYSE:GIL), Store Capital Corporation (NYSE:STOR), and Santander Consumer USA Holdings Inc (NYSE:SC). This group of stocks' market caps match BG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIV,21,628055,0 GIL,27,562233,2 STOR,22,1022248,-2 SC,22,748622,1 Average,23,740290,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $740 million. That figure was $687 million in BG's case. Gildan Activewear Inc (NYSE:GIL) is the most popular stock in this table. On the other hand Apartment Investment and Management Co. (NYSE:AIV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Bunge Limited (NYSE:BG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BG were disappointed as the stock returned -2.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.