Five Basic Industries Stocks Smart Money Like

#3 Barrick Gold Corporation (USA) (NYSE:ABX)

– Number of Hedge Fund Holders (as of June 30): 53
– Total Value of Hedge Fund Holdings (as of June 30): $3.84 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 15.40%

Given that gold stocks have been red-hot in 2016, it’s not surprising that 53 top funds (up by four funds from the previous quarter) owned Barrick Gold Corporation (USA) (NYSE:ABX) at the end of the second quarter. With a forward P/E of 18.54, the stock isn’t expensive and Barrick has substantial upside left if gold prices continue trending higher. Any combination of global recession, major geopolitical event, or negative outcome resulting from Britain’s decision to leave the EU could cause many investors to allocate more of their portfolios towards gold. Higher gold prices would in turn translate to greater profits for Barrick. Shares of the company could face headwinds, however, if gold sells off due to the coming interest rate hikes.

#2 Air Products & Chemicals, Inc. (NYSE:APD)

– Number of Hedge Fund Holders (as of June 30): 56
– Total Value of Hedge Fund Holdings (as of June 30): $5.01 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 16.30%

With a stake of 7.6 million shares, Air Products & Chemicals, Inc. (NYSE:APD) is Bill Ackman’s Pershing Square’s third-largest position, accounting for 14.37% of Pershing’s equity portfolio. Given Air Products & Chemicals’ rock-solid cash flows and diversified exposure to the global economy, it’s not surprising that Ackman would like the stock. Air Products shares have done very well, advancing by 20% year-to-date, and could rise more if the Chinese economy and/or energy prices recover. Air Products’ upcoming spin-off of its materials business could also prove as an additional upside catalyst.

#1 Monsanto Company (NYSE:MON)

– Number of Hedge Fund Holders (as of June 30): 87
– Total Value of Hedge Fund Holdings (as of June 30): $5.32 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 11.80%

With 87 funds from our database owning shares in the company at the end of the second quarter, up by 36 from the previous quarter, Monsanto Company (NYSE:MON) is the smart money’s top basic materials pick on our list. Despite Monsanto’s previous rejections, many hedge funds expect German company Bayer to buy Monsanto due to the potential synergies from the merger. According to Bloomberg, Bayer and Monsanto’s CEOs have engaged in constructive talks over a potential merger and the two companies could reach a deal by September 6. If the merger doesn’t materialize, Monsanto still has a promising future, given the increasingly affluent global population.

Disclosure: none