Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Mosaic Co (NYSE:MOS).
Mosaic Co (NYSE:MOS) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. MOS was in 24 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with MOS positions at the end of the previous quarter. At the end of this article we will also compare MOS to other stocks including J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Sealed Air Corp (NYSE:SEE), and Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) to get a better sense of its popularity.
Follow Mosaic Co (NYSE:MOS)
Follow Mosaic Co (NYSE:MOS)
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 does the smart money think about Mosaic Co (NYSE:MOS)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a 26% surge from the second quarter of 2016. Despite that, hedge fund ownership remains at depressed levels compared to a few quarters earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Mosaic Co (NYSE:MOS). Adage Capital Management has a $130.5 million position in the stock. Coming in second is Steven Richman of East Side Capital (RR Partners), with a $76.9 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain Paul Marshall and Ian Wace’s Marshall Wace LLP and George Hall’s Clinton Group.
As industry-wide interest jumped, key hedge funds have been driving this bullishness. Crescent Park Management, managed by Eli Cohen, created the biggest call position in Mosaic Co (NYSE:MOS). Crescent Park Management had $19.1 million invested in the company at the end of the quarter. Clinton Group also made a $15.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Matthew Tewksbury’s Stevens Capital Management.
Let’s check out hedge fund activity in other stocks similar to Mosaic Co (NYSE:MOS). These stocks are J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Sealed Air Corp (NYSE:SEE), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), and Alliant Energy Corporation (NYSE:LNT). This group of stocks’ market valuations are closest to MOS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JBHT | 31 | 353428 | 3 |
| SEE | 31 | 1518782 | -15 |
| NCLH | 23 | 189921 | -3 |
| LNT | 15 | 72746 | -1 |
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $534 million. That figure was $343 million in MOS’s case. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is the most popular stock in this table. On the other hand Alliant Energy Corporation (NYSE:LNT) is the least popular one with only 15 bullish hedge fund positions. Mosaic Co (NYSE:MOS) 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 JBHT might be a better candidate to consider a long position.
Disclosure: None
