With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was General Mills, Inc. (NYSE:GIS).
General Mills, Inc. (NYSE:GIS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 32 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ingersoll-Rand Plc (NYSE:IR), AvalonBay Communities Inc (NYSE:AVB), and Weyerhaeuser Co. (NYSE:WY) to gather more data points.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the latest hedge fund action encompassing General Mills, Inc. (NYSE:GIS).
How are hedge funds trading General Mills, Inc. (NYSE:GIS)?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in GIS over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Mario Gabelli’s GAMCO Investors has the biggest position in General Mills, Inc. (NYSE:GIS), worth close to $64.4 million, accounting for 0.4% of its total 13F portfolio. The second most bullish fund manager is Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $64.4 million call position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Clint Carlson’s Carlson Capital.
Judging by the fact that General Mills, Inc. (NYSE:GIS) has experienced a decline in interest from hedge fund managers, logic holds that there lies a certain “tier” of funds who were dropping their full holdings last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $47.8 million in stock. Jim Simons’s fund, Renaissance Technologies, also sold off its stock, about $15.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as General Mills, Inc. (NYSE:GIS) but similarly valued. These stocks are Ingersoll-Rand Plc (NYSE:IR), AvalonBay Communities Inc (NYSE:AVB), Weyerhaeuser Co. (NYSE:WY), and Equity Residential (NYSE:EQR). All of these stocks’ market caps are closest to GIS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IR | 42 | 2099674 | 9 |
| AVB | 26 | 970758 | 1 |
| WY | 35 | 648691 | 7 |
| EQR | 23 | 432981 | -1 |
| Average | 31.5 | 1038026 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.04 billion. That figure was $290 million in GIS’s case. Ingersoll-Rand Plc (NYSE:IR) is the most popular stock in this table. On the other hand Equity Residential (NYSE:EQR) is the least popular one with only 23 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
