The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Canadian National Railway Company (NYSE:CNI) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Canadian National Railway Company (NYSE:CNI) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CNI has seen an increase in enthusiasm from smart money in recent months. There were 40 hedge funds in our database with CNI holdings at the end of June. Our calculations also showed that CNI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
John Armitage of Egerton Capital
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. Keeping this in mind let’s review the new hedge fund action encompassing Canadian National Railway Company (NYSE:CNI).
Do Hedge Funds Think CNI Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter of 2021. On the other hand, there were a total of 26 hedge funds with a bullish position in CNI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, TCI Fund Management held the most valuable stake in Canadian National Railway Company (NYSE:CNI), which was worth $4246.4 million at the end of the third quarter. On the second spot was Bill & Melinda Gates Foundation Trust which amassed $1511.6 million worth of shares. Egerton Capital Limited, Millennium Management, and Holocene Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position TCI Fund Management allocated the biggest weight to Canadian National Railway Company (NYSE:CNI), around 10.2% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 7.92 percent of its 13F equity portfolio to CNI.
Consequently, some big names have been driving this bullishness. Egerton Capital Limited, managed by John Armitage, created the most outsized position in Canadian National Railway Company (NYSE:CNI). Egerton Capital Limited had $916.5 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $128.5 million position during the quarter. The following funds were also among the new CNI investors: Louis Bacon’s Moore Global Investments, Peter Avellone’s Cartenna Capital, and Stephen J. Errico’s Locust Wood Capital Advisers.
Let’s check out hedge fund activity in other stocks similar to Canadian National Railway Company (NYSE:CNI). These stocks are Mondelez International Inc (NASDAQ:MDLZ), British American Tobacco plc (NYSE:BTI), Enbridge Inc (NYSE:ENB), Lam Research Corporation (NASDAQ:LRCX), Micron Technology, Inc. (NASDAQ:MU), Dell Technologies Inc. (NYSE:DELL), and The TJX Companies, Inc. (NYSE:TJX). This group of stocks’ market values are closest to CNI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDLZ | 46 | 1922079 | -7 |
| BTI | 9 | 724383 | -3 |
| ENB | 24 | 211478 | 5 |
| LRCX | 47 | 3519311 | -11 |
| MU | 63 | 3841359 | -24 |
| DELL | 60 | 6142951 | -2 |
| TJX | 63 | 2330294 | 7 |
| Average | 44.6 | 2670265 | -5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.6 hedge funds with bullish positions and the average amount invested in these stocks was $2670 million. That figure was $7392 million in CNI’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Canadian National Railway Company (NYSE:CNI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNI is 67.6. 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. A small number of hedge funds were also right about betting on CNI as the stock returned 5.2% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
