Is Bunge Ltd (NYSE:BG) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Bunge Ltd (NYSE:BG) investors should pay attention to a decrease in hedge fund sentiment recently. BG was in 28 hedge funds’ portfolios at the end of September. There were 33 hedge funds in our database with BG holdings at the end of the previous quarter. At the end of this article we will also compare BG to other stocks, including American Water Works Co., Inc. (NYSE:AWK), Lennar Corporation (NYSE:LEN), and Juniper Networks, Inc. (NYSE:JNPR) to get a better sense of its popularity.
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According to most investors, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are more than an 8000 funds with their doors open today, Our experts look at the top tier of this group, approximately 700 funds. These money managers preside over the majority of the hedge fund industry’s total capital, and by keeping an eye on their best stock picks, Insider Monkey has formulated a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s check out the fresh action encompassing Bunge Ltd (NYSE:BG).
What does the smart money think about Bunge Ltd (NYSE:BG)?
Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ralph V. Whitworth’s Relational Investors has the number one position in Bunge Ltd (NYSE:BG), worth close to $362.6 million, accounting for 43.1% of its total 13F portfolio. The second most bullish fund manager is Carlson Capital, led by Clint Carlson, holding a $199.9 million position; 2.3% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish include D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.
Because Bunge Ltd (NYSE:BG) has witnessed declining sentiment from hedge fund managers, logic holds that there was a specific group of hedgies who sold off their entire stakes heading into Q4. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $102.8 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund sold off about $17.7 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 5 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Bunge Ltd (NYSE:BG). These stocks are American Water Works Co., Inc. (NYSE:AWK), Lennar Corporation (NYSE:LEN), Juniper Networks, Inc. (NYSE:JNPR), and EQT Corporation (NYSE:EQT). All of these stocks’ market caps are closest to BG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AWK | 22 | 291523 | -5 |
| LEN | 49 | 1106175 | 5 |
| JNPR | 41 | 928212 | -4 |
| EQT | 39 | 922108 | 2 |
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $812 million. That figure was $1.07 billion in BG’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand American Water Works Co., Inc. (NYSE:AWK) is the least popular one with only 22 bullish hedge fund positions. Bunge Ltd (NYSE:BG) 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 LEN might be a better candidate to consider a long position.
