5 Agricultural Chemicals Stocks to Own Right Now

Agrochemicals or agricultural chemicals represent chemical products that are primarily used for crop protection. The majority of players within this industry constantly seek for newly-invented and technologically advanced products that can enhance the production of crops. The demand for crops is set to grow at a steady rate in the years and decades ahead, along with the global population growth. At the end of the day, we all need to eat in order to obtain energy to growth, move, and restore our bodies. That being said, in the following article we will present a list of five agrochemicals stocks that have been favored by the hedge funds monitored by Insider Monkey. As you will notice later on in the article, the list is constructed based on the hedge fund sentiment.

And why does Insider Monkey pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research has shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 118% over the last 36 months and outperformed the S&P 500 Index by 60 percentage points (see the details here).

5. Agrium Inc. (USA) (NYSE:AGU)

Investors with Long Positions (as of June 30): 29

Aggregate Value of Investors’ Holdings (as of June 30): $1.39 Billion

The number of hedge funds with positions in Agrium Inc. (USA) (NYSE:AGU) at the end of the second quarter was up by five compared to the end of March, while the value of investors’ holdings climbed by $251.77 million. Earlier this month, Loveland Products, a subsidiary of Agrium, revealed a new product for residue management and nutrient release from crop residues. This is what this industry is all about – finding new ways to improve the efficiency of crop-related activities and processes. Agrium’s shares are currently trading at relatively the same price level as at the beginning of the year. Jeffrey Ubben’s ValueAct Capital owns 10.00 million shares of Agrium Inc. (USA) (NYSE:AGU), the value of which account for 5.58% of the fund’s equity portfolio as of June 30.

4. Potash Corp. of Saskatchewan Inc. (USA) (NYSE:POT)

Investors with Long Positions (as of June 30): 30

Aggregate Value of Investors’ Holdings (as of June 30): $905.02 Million

There were two fewer hedge funds invested in Potash Corp. of Saskatchewan Inc. (USA) (NYSE:POT) at the end of the latest quarter relative to the previous one. At the same time, the value of hedge funds’ positions in the stock shrank by $89.72 million. The shares of the global producer and marketer of fertilizers have endured serious pain throughout the whole year, declining more than 40% year-to-date. This weak performance was primarily attributed to the declining potash prices, which are believed to go even lower in the months ahead. However, First Eagle Investment Management, the largest shareholders of Potash Corp. of Saskatchewan Inc. (USA) (NYSE:POT) within our database, boosted its stake in the company during the second quarter to 22.72 million shares.

3. Mosaic Co (NYSE:MOS)

Investors with Long Positions (as of June 30): 47

Aggregate Value of Investors’ Holdings (as of June 30): $931.34 Million

Mosaic Co (NYSE:MOS) became more popular among the hedge funds from our database in the second quarter, as the number of top money managers with positions in the stock increased by seven quarter-over-quarter. Similarly, the value of these positions grew by 73% or $392.98 million during this period. Earlier this week, the nation’s largest producer of potash fertilizers announced its intentions to cut on output. The company claimed that the global crop nutrient markets have weakened, primarily impacted by volatile exchange rates, reduced grain and oilseed prices, and global political and economic uncertainty. Let’s not forget to mention that the shares of Mosaic are 28% in the red year-to-date. In the meantime, Phill Gross and Robert Atchinson’s Adage Capital Management reported owning 3.98 million shares in Mosaic Co (NYSE:MOS) via its 13F filing for the June quarter.

2. CF Industries Holdings Inc. (NYSE:CF)

Investors with Long Positions (as of June 30): 47

Aggregate Value of Investors’ Holdings (as of June 30): $2.29 Billion

CF Industries Holdings Inc. (NYSE:CF) lost some of its appeal among the smart money, as the number of hedge funds with long stakes declined by 13 during the recent quarter. Likewise, the value of the stakes decreased $251.88 million during the three-month period. The revenue generated by the manufacturer and distributor of nitrogen fertilizers and other nitrogen products has been affected by the falling prices for nitrogen fertilizers lately. The increasing global capacity is one of the primary reasons that stands behind thelower prices, which can in turn explain the year-to-date drop of 14% in company’s share price. D.E. Shaw & CO., founded by David E. Shaw back in 1988, is the top shareholder of CF Industries Holdings Inc. (NYSE:CF) within our extensive database, holding 6.91 million shares.

1. Monsanto Company (NYSE:MON)

Investors with Long Positions (as of June 30): 64

Aggregate Value of Investors’ Holdings (as of June 30): $3.54 Billion

Indisputably, Monsanto Company (NYSE:MON) is the most popular agrochemicals stock among the hedge funds observed by the Insider Monkey team. The number of top money managers that were long on the stock at the end of the second quarter stood at 64, up by ten compared to the previous quarter. By the same token, the value of their investments in Monsanto’s stock spiked $595.10 million during the June quarter. The shares of company have had a rough year so far and it seems that the downfall is not likely to stop (i.e. the stock has lost nearly 30% year-to-date). Just a few days ago, Monsanto’s officials revealed new plans of repositioning the company as a data provider for the agricultural industry, in addition to its chemicals, seeds and genetic operations. Specifically, the company intends to offer services, software and hardware tools in order to assist farmers in enhancing crop production, according to Reuters. Larry Robbins’ Glenview Capital owns 11.07 shares of Monsanto Company (NYSE:MON) according to its latest 13F filing.

Disclosure: None