Deere & Company (NYSE:DE). is the beneficiary of some analyst love today, after analysts at BMO Capital Markets upgraded the stock to ‘Outperform’ from ‘Market Perform’ and raised their price target on it to $96 from $70 per share. The analysts like how Deere has cut costs, trimmed inventory, and made itself more efficient. The efforts should set the stage for greater returns down the road when crop prices rebound. Deere & Company (NYSE:DE) shares are 2% higher on the news and have rallied by over 4% year-to-date after a major decline in the second-half of 2015. Shares of the company do look attractive given the company’s annual dividend yield of over 3%.
Deere & Company (NYSE:DE) was in 30 hedge funds’ portfolios at the end of March. DE investors should pay attention to an increase in enthusiasm from smart money lately. There were 28 hedge funds in our database with DE holdings at the end of the previous quarter. At the end of this article we will also compare DE to other stocks including Tyson Foods, Inc. (NYSE:TSN), Applied Materials, Inc. (NASDAQ:AMAT), and Synchrony Financial (NYSE:SYF) to get a better sense of its popularity.
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When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the number one position in Deere & Company (NYSE:DE), worth over $1.79 billion, corresponding to 1.4% of its total 13F portfolio. On Berkshire Hathaway’s heels is David Blood and Al Gore of Generation Investment Management, with a $466.6 million position; the fund has 5.7% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Bob Peck and Andy Raab’s FPR Partners, Tom Gayner’s Markel Gayner Asset Management, and Ric Dillon’s Diamond Hill Capital.
On the next page we’ll run through some of the funds that were bullish on Deere during Q1 and see how the stock stacks up against others in popularity in its market cap range.
With general bullishness amongst the heavyweights, key hedge funds were breaking ground in Deere. Tide Point Capital, managed by Christopher A. Winham, initiated the most outsized call position in Deere & Company (NYSE:DE). Tide Point Capital had $46.2 million invested in the company at the end of the quarter. The fund also initiated a $34.6 million long position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Robert Bishop’s Impala Asset Management, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). These stocks are Tyson Foods, Inc. (NYSE:TSN), Applied Materials, Inc. (NASDAQ:AMAT), Synchrony Financial (NYSE:SYF), and Public Service Enterprise Group Inc. (NYSE:PEG). This group of stocks’ market caps are similar to DE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSN | 40 | 2000661 | 3 |
| AMAT | 39 | 963680 | -2 |
| SYF | 67 | 3454602 | -15 |
| PEG | 24 | 763553 | 1 |
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $1.80 billion. That figure was $3.47 billion in DE’s case. Synchrony Financial (NYSE:SYF) is the most popular stock in this table. On the other hand Public Service Enterprise Group Inc. (NYSE:PEG) is the least popular one with only 24 bullish hedge fund positions. Deere & Company (NYSE:DE) 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 SYF might be a better candidate to consider a long position.
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