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Here’s What Hedge Funds Think About Fresh Del Monte Produce Inc (FDP)

Asma UL Husna

A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell's pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Fresh Del Monte Produce Inc (NYSE:FDP) during the quarter.

Is Fresh Del Monte Produce Inc (NYSE:FDP) worth your attention right now? Prominent investors are getting less optimistic. The number of bullish hedge fund bets retreated by 1 lately. Our calculations also showed that FDP 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 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.

BlueMountain Capital Management's Returns, AUM and Holdings

Let's take a look at the key hedge fund action encompassing Fresh Del Monte Produce Inc (NYSE:FDP).

How have hedgies been trading Fresh Del Monte Produce Inc (NYSE:FDP)?

Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in FDP a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FDP_june2019

The largest stake in Fresh Del Monte Produce Inc (NYSE:FDP) was held by Renaissance Technologies, which reported holding $28.8 million worth of stock at the end of March. It was followed by Royce & Associates with a $5.3 million position. Other investors bullish on the company included Citadel Investment Group, Blue Mountain Capital, and AQR Capital Management.

Due to the fact that Fresh Del Monte Produce Inc (NYSE:FDP) has witnessed a decline in interest from the smart money, it's easy to see that there lies a certain "tier" of hedge funds who were dropping their full holdings in the third quarter. Interestingly, Israel Englander's Millennium Management dropped the largest investment of the 700 funds watched by Insider Monkey, valued at close to $3.5 million in call options, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund dropped about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the third quarter.

Let's now review hedge fund activity in other stocks similar to Fresh Del Monte Produce Inc (NYSE:FDP). We will take a look at Getty Realty Corp. (NYSE:GTY), MGP Ingredients Inc (NASDAQ:MGPI), Gulfport Energy Corporation (NASDAQ:GPOR), and Cambrex Corporation (NYSE:CBM). This group of stocks' market caps resemble FDP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GTY,9,89875,1 MGPI,13,24351,5 GPOR,23,141764,1 CBM,13,33277,0 Average,14.5,72317,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $43 million in FDP's case. Gulfport Energy Corporation (NASDAQ:GPOR) is the most popular stock in this table. On the other hand Getty Realty Corp. (NYSE:GTY) is the least popular one with only 9 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately FDP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FDP investors were disappointed as the stock returned 2.5% during the same time 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 so far in Q2.

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

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