As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Farmland Partners Inc (NYSE:FPI).
Farmland Partners Inc (NYSE:FPI) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 10. FPI has seen a decrease in enthusiasm from smart money lately. There were 8 hedge funds in our database with FPI positions at the end of the fourth quarter. Our calculations also showed that FPI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Chase Coleman of Tiger Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the recent hedge fund action regarding Farmland Partners Inc (NYSE:FPI).
Do Hedge Funds Think FPI Is A Good Stock To Buy Now?
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in FPI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matthew Hulsizer’s PEAK6 Capital Management has the largest call position in Farmland Partners Inc (NYSE:FPI), worth close to $1.2 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which holds a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Chase Coleman’s Tiger Global Management LLC, and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Farmland Partners Inc (NYSE:FPI), around 0.01% of its 13F portfolio. PEAK6 Capital Management is also relatively very bullish on the stock, earmarking 0.0029 percent of its 13F equity portfolio to FPI.
Due to the fact that Farmland Partners Inc (NYSE:FPI) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedge funds that slashed their positions entirely by the end of the first quarter. Intriguingly, J. Alan Reid, Jr.’s Forward Management dropped the largest position of the “upper crust” of funds followed by Insider Monkey, totaling about $0.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks similar to Farmland Partners Inc (NYSE:FPI). These stocks are Kaleido BioSciences, Inc. (NASDAQ:KLDO), Uxin Limited (NASDAQ:UXIN), Village Super Market, Inc. (NASDAQ:VLGEA), Cardiff Oncology, Inc. (NASDAQ:CRDF), Central Puerto S.A. (NYSE:CEPU), Vitru Limited (NASDAQ:VTRU), and Viracta Therapeutics, Inc. (NASDAQ:VIRX). This group of stocks’ market caps are similar to FPI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KLDO | 6 | 7960 | 4 |
| UXIN | 3 | 5133 | 0 |
| VLGEA | 7 | 30340 | -3 |
| CRDF | 13 | 63864 | -5 |
| CEPU | 3 | 1345 | -1 |
| VTRU | 3 | 8866 | -3 |
| VIRX | 13 | 65765 | 8 |
| Average | 6.9 | 26182 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $2 million in FPI’s case. Cardiff Oncology, Inc. (NASDAQ:CRDF) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 3 bullish hedge fund positions. Farmland Partners Inc (NYSE:FPI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FPI is 27. 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 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on FPI, though not to the same extent, as the stock returned 8.1% since the end of Q1 (through June 18th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
