Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Archer Daniels Midland Company (NYSE:ADM) in this article.
Is Archer Daniels Midland Company (NYSE:ADM) a buy right now? The smart money is selling. The number of long hedge fund bets dropped by 2 in recent months. At the end of this article we will also compare ADM to other stocks including Equity Residential (NYSE:EQR), Norfolk Southern Corp. (NYSE:NSC), and Intuitive Surgical, Inc. (NASDAQ:ISRG) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Archer Daniels Midland Company (NYSE:ADM)?
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a dip of 8% from the previous quarter. Hedge fund ownership has languished around the 25-level for a few quarters now after standing at 33 on September 30, 2015. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the most valuable position in Archer Daniels Midland Company (NYSE:ADM), worth close to $259.4 million. The second largest stake is held by D E Shaw, founded by David E. Shaw, which holds a $132 million position. Some other peers that hold long positions consist of Tom Gayner’s Markel Gayner Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Mario Gabelli’s GAMCO Investors.
Judging by the fact that Archer Daniels Midland Company (NYSE:ADM) has faced falling interest from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $12 million in stock. William Harnisch’s fund, Peconic Partners LLC, also said goodbye to its stock, about $9.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Archer Daniels Midland Company (NYSE:ADM) but similarly valued. These stocks are Equity Residential (NYSE:EQR), Norfolk Southern Corp. (NYSE:NSC), Intuitive Surgical, Inc. (NASDAQ:ISRG), and NVIDIA Corporation (NASDAQ:NVDA). All of these stocks’ market caps match ADM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQR | 20 | 794112 | -5 |
| NSC | 36 | 758740 | 4 |
| ISRG | 33 | 1266473 | 2 |
| NVDA | 51 | 1900101 | 1 |
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1.18 billion. That figure was $676 million in ADM’s case. NVIDIA Corporation (NASDAQ:NVDA) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 20 bullish hedge fund positions. Archer Daniels Midland Company (NYSE:ADM) 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. In this regard NVDA might be a better candidate to consider a long position.
Disclosure: None
