Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Corteva, Inc. (NYSE:CTVA) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Corteva, Inc. (NYSE:CTVA) undervalued? Prominent investors were betting on the stock. The number of bullish hedge fund positions increased by 7 in recent months. Corteva, Inc. (NYSE:CTVA) was in 41 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CTVA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the fresh hedge fund action surrounding Corteva, Inc. (NYSE:CTVA).
John Petry of Sessa Capital
Do Hedge Funds Think CTVA Is A Good Stock To Buy Now?
At the end of September, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CTVA over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Corteva, Inc. (NYSE:CTVA) was held by Starboard Value LP, which reported holding $386.8 million worth of stock at the end of September. It was followed by Eminence Capital with a $185.7 million position. Other investors bullish on the company included Sessa Capital, Glenview Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to Corteva, Inc. (NYSE:CTVA), around 7.47% of its 13F portfolio. Starboard Value LP is also relatively very bullish on the stock, dishing out 7.08 percent of its 13F equity portfolio to CTVA.
As one would reasonably expect, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Corteva, Inc. (NYSE:CTVA). Marshall Wace LLP had $8.9 million invested in the company at the end of the quarter. Ed Bosek’s BeaconLight Capital also made a $3.5 million investment in the stock during the quarter. The following funds were also among the new CTVA investors: Javier Velazquez’s Albar Capital, Andrew Weiss’s Weiss Asset Management, and Mika Toikka’s AlphaCrest Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Corteva, Inc. (NYSE:CTVA). These stocks are Seagen Inc. (NASDAQ:SGEN), Equifax Inc. (NYSE:EFX), McKesson Corporation (NYSE:MCK), Public Service Enterprise Group Incorporated (NYSE:PEG), Suncor Energy Inc. (NYSE:SU), Arthur J. Gallagher & Co. (NYSE:AJG), and American Water Works Company, Inc. (NYSE:AWK). This group of stocks’ market values are closest to CTVA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SGEN | 40 | 9471190 | 3 |
| EFX | 43 | 3360148 | 6 |
| MCK | 51 | 2277126 | 0 |
| PEG | 26 | 518847 | 0 |
| SU | 32 | 1084858 | 0 |
| AJG | 32 | 1388489 | -8 |
| AWK | 28 | 1127944 | -2 |
| Average | 36 | 2746943 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $2747 million. That figure was $1162 million in CTVA’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 26 bullish hedge fund positions. Corteva, Inc. (NYSE:CTVA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTVA is 70. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on CTVA as the stock returned 14.6% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Corteva Inc. (NYSE:CTVA)
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Disclosure: None. This article was originally published at Insider Monkey.
