Do Hedge Funds Love S&P Global Inc. (SPGI)?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards S&P Global Inc. (NYSE:SPGI).

Is S&P Global Inc. (NYSE:SPGI) a great investment right now? Prominent investors were reducing their bets on the stock. The number of long hedge fund bets shrunk by 9 recently. S&P Global Inc. (NYSE:SPGI) was in 66 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 76. Our calculations also showed that SPGI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 75 hedge funds in our database with SPGI positions at the end of the fourth quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Chris Hohn of TCI Fund Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. With all of this in mind we’re going to view the latest hedge fund action regarding S&P Global Inc. (NYSE:SPGI).

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

At the end of March, a total of 66 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SPGI over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, TCI Fund Management was the largest shareholder of S&P Global Inc. (NYSE:SPGI), with a stake worth $2065.5 million reported as of the end of March. Trailing TCI Fund Management was Cantillon Capital Management, which amassed a stake valued at $845.7 million. Valley Forge Capital, Third Point, and Citadel Investment Group 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 Rings Capital Management allocated the biggest weight to S&P Global Inc. (NYSE:SPGI), around 43.85% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, dishing out 21.24 percent of its 13F equity portfolio to SPGI.

Judging by the fact that S&P Global Inc. (NYSE:SPGI) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their positions entirely heading into Q2. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management sold off the largest position of the 750 funds followed by Insider Monkey, comprising close to $147.9 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $76.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds heading into Q2.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as S&P Global Inc. (NYSE:SPGI) but similarly valued. These stocks are Coupang, Inc. (NYSE:CPNG), Cigna Corporation (NYSE:CI), U.S. Bancorp (NYSE:USB), General Motors Company (NYSE:GM), Mondelez International Inc (NASDAQ:MDLZ), BP plc (NYSE:BP), and Canadian National Railway Company (NYSE:CNI). All of these stocks’ market caps match SPGI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.4 hedge funds with bullish positions and the average amount invested in these stocks was $7050 million. That figure was $6245 million in SPGI’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. S&P Global Inc. (NYSE:SPGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPGI is 54.5. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on SPGI as the stock returned 11.5% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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