Below we presented the list of 5 best agtech stocks to buy now. For our detailed discussion and a more comprehensive list please see 10 Best Agriculture Technology Stocks To Buy Now.
5. IDEXX Laboratories, Inc. (IDXX)
No of HFs: 41
Dollar Value of Hedge Fund Holdings: $545 million
Baron Asset Fund recently talked about IDXX in its 2020 Q2 and Q3 investor letters. Here is what they said in their Q2 letter:
Shares of IDEXX Laboratories, Inc., a veterinary diagnostic company, gained after reporting excellent quarterly results that exceeded expectations, despite the headwinds caused by the pandemic. Organic growth in IDEXX’s core companion animals group finished the quarter up double digits, and the company repurchased almost $200 million of stock in the quarter, its highest level in many years. Although visits to veterinary clinics fell approximately 30% during the peak of lockdowns, management indicated that trends “meaningfully improved” during the second quarter. To be prudent, management committed to reduce corporate expenses by $100 million, increased its cash position, and temporarily suspended future share repurchases. We believe the results demonstrated that IDEXX is a unique, competitively advantaged business that is likely to bounce back quickly and outperform across economic cycles.”
Here is an excerpt from Baron’s Q3 letter:
“Shares of veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance in the quarter. Veterinary visits continued to exhibit a “V” shaped recovery from the initial pandemic-related slowdown, with visits growing at double-digit rates. IDEXX’s competitive trends are outstanding, and we expect new proprietary innovations and field sales force expansion to be meaningful contributors to growth. Margins are increasing significantly. We believe margins can exceed 30% over time.”
4. Bunge Ltd (BG)
No of HFs: 41
Dollar Value of Hedge Fund Holdings: $701 million
Bunge Ltd (NYSE:BG) is a diversified agribusiness company that is involved in acquisition, sale, storing, transportation and processing of grains and oilseeds that is used to produce protein for animal feed and edible oil products for commercial customers. It is an essential part of the global food chain. It is also involved in production of ethanol and selling of fertilizers. In Q4 Bunge said it would sell its refinery in Rotterdam to Neste Corporation for 285 million euro ($345.5 million) in cash. The deal is expected to close in the first quarter of 2021 and the facility will be then leased from Neste in phased transition that is expected to be completed by 2024.
3. Deere & Company (DE)
No of HFs: 42
Dollar Value of Hedge Fund Holdings: $1.3 billion
We previously highlighted DE in our Top 10 Robotics Stocks To Buy list. Cathie Woods’ ARK Invest has a large position in Deere. Here is what First Eagle said about DE in its 2020 Q3 investor letter:
“Deere & Company manufactures and distributes equipment used in agriculture, construction, forestry and turf care in more than 30 countries. The company executed well in what has been a supportive environment for its products marked by strong pricing in agricultural commodities and robust crop yields. Notably, Deere successfully rolled out price increases in its Agriculture & Turf division, which improved its operating margins.”
Massif Capital was a bit bearish about DE earlier in 2020. Here is what they said in the spring of 2020:
“John Deere continues to excel at setting and surpassing their own quarterly expectations. The market rewards them for doing so; their stock appreciated ~7% on the day they announced earnings, even as their underlying financials paint a rather bleak picture. Messaging from senior management focused on the stabilization of the U.S. agriculture industry. The passing of the USMCA and the Phase I trade deal last fall certainly put some life back into their sails, even if it’s not at all clear how accretive this is for the U.S. farmer, let along DE’s income statement. Compared to 2018, DE’s first quarter 2020 net sales (which concluded on January 31 and did not incorporate any of the COVID19 effects) fell 6%, led by their agriculture & turf division falling 4%, construction & forestry falling 10% all balanced out by their financial services division gaining 9%. Total operating profit for the firm fell 16% year-over-year, primarily driven by a sharp 59% drop in the operating profit from construction & forestry.
Deere’s headline acquisition of Wirtigen in 2018 seems to be causing more headwinds than tailwinds thus far. The firm’s 2020 outlook does not provide much relief. Prior to the knowledge that the pandemic would effectively press pause on economic activity for an unknown period of time, both their agriculture and construction divisions were expecting sales to contract 10-15%.”
2. Ecolab (ECL)
No of HFs: 52
Dollar Value of Hedge Fund Holdings: $2.3 billion
Ecolab is a global specialty chemicals and life sciences company. It generates most of its revenue from its water, food and beverage, downstream, and paper businesses. ECL also has a smaller pest control and textile unit that accounts for less than 10% of its total revenue.
At the end of the third quarter of 2020, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. By comparison, 42 hedge funds held shares or bullish call options in ECL a year ago. Hedge funds have never been his bullish on ECL before. The largest stake in Ecolab Inc. (NYSE:ECL) was held by Bill & Melinda Gates Foundation Trust, which reported holding $872.6 million worth of stock at the end of September. It was followed by Cantillon Capital Management with a $440.2 million position. Other investors bullish on the company included Impax Asset Management, AQR Capital Management, and Markel Gayner Asset Management.
As industrywide interest jumped, key hedge funds have jumped into Ecolab Inc. (NYSE:ECL) headfirst. Holocene Advisors, managed by Brandon Haley, created the largest position in Ecolab Inc. (NYSE:ECL). Holocene Advisors had $45.7 million invested in the company at the end of the quarter. Josh Donfeld and David Rogers’s Castle Hook Partners also made a $24.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Mikal Patel’s Oribel Capital Management, Michael Cowley’s Sandbar Asset Management, and D. E. Shaw’s D E Shaw.
1. Zoetis Inc (ZTS)
No of HFs: 58
Dollar Value of Hedge Fund Holdings: $2.25 billion
ZTS ranks #1 in our list of the best agriculture technology stocks to buy. Zoetis is the world’s largest medicine and vaccine producer for animals and livestock. It was spun out of Pfizer and today its market cap is nearly 40% of Pfizer’s market cap. As consumers spend more and more money on their pets ZTS shareholders will benefit. We also know that global meat consumption has been increasing secularly and dramatically ((more than 400%) over the past 50 years. Rising incomes and growing populations in poorer parts of the world will continue to support this trend and ZTS will definitely continue to benefit from this.
According to Insider Monkey’s hedge fund database, William von Mueffling’s Cantillon Capital Management has the number one position in Zoetis Inc (NYSE:ZTS), worth close to $482.8 million, amounting to 4% of its total 13F portfolio. Coming in second is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $380.4 million position; 2.4% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism encompass Nicolai Tangen’s Ako Capital, Barry Dargan’s Intermede Investment Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Intermede Investment Partners allocated the biggest weight to Zoetis Inc (NYSE:ZTS), around 5.98% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, dishing out 4.59 percent of its 13F equity portfolio to ZTS.
Please also see 10 Best Growth Stocks To Buy Now and Top 10 Largest Agricultural Companies In The World.
