Do Hedge Funds Love Fresh Del Monte Produce Inc (FDP)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Fresh Del Monte Produce Inc (NYSE:FDP) in this article.

Is Fresh Del Monte Produce Inc (NYSE:FDP) a healthy stock for your portfolio? The best stock pickers were reducing their bets on the stock. The number of bullish hedge fund positions fell by 1 recently. Fresh Del Monte Produce Inc (NYSE:FDP) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 18. Our calculations also showed that FDP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with FDP positions at the end of the fourth quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $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 let’s take a look at the key hedge fund action surrounding Fresh Del Monte Produce Inc (NYSE:FDP).

Do Hedge Funds Think FDP Is A Good Stock To Buy Now?

At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FDP over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Fresh Del Monte Produce Inc (NYSE:FDP), worth close to $9.7 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Cliff Asness’s AQR Capital Management, and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Fresh Del Monte Produce Inc (NYSE:FDP), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to FDP.

Because Fresh Del Monte Produce Inc (NYSE:FDP) has experienced declining sentiment from the smart money, logic holds that there was a specific group of funds who were dropping their full holdings in the first quarter. It’s worth mentioning that Valerie Malter’s Matarin Capital said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $0.4 million in stock. Ali Motamed’s fund, Invenomic Capital Management, also dropped its stock, about $0 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fresh Del Monte Produce Inc (NYSE:FDP) but similarly valued. We will take a look at Nexa Resources S.A. (NYSE:NEXA), StepStone Group Inc. (NASDAQ:STEP), Harsco Corporation (NYSE:HSC), Kinnate Biopharma Inc. (NASDAQ:KNTE), Materion Corp (NYSE:MTRN), Score Media and Gaming Inc. (NASDAQ:SCR), and COMPASS Pathways Plc (NASDAQ:CMPS). This group of stocks’ market values are closest to FDP’s market value.

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As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $18 million in FDP’s case. Materion Corp (NYSE:MTRN) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Fresh Del Monte Produce Inc (NYSE:FDP) is even less popular than NEXA. Our overall hedge fund sentiment score for FDP is 10.7. 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. Hedge funds clearly dropped the ball on FDP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on FDP as the stock returned 22% since Q1 (through June 11th) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.