Hedge Funds Are Dumping CF Industries Holdings, Inc. (CF)

CF Industries Holdings, Inc. (NYSE:CF) has seen a decrease in hedge fund sentiment in recent months.

In the 21st century investor’s toolkit, there are many indicators investors can use to analyze stocks. A duo of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best investment managers can beat the broader indices by a healthy margin (see just how much).

Just as important, bullish insider trading activity is a second way to break down the financial markets. As the old adage goes: there are lots of motivations for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if “monkeys” understand where to look (learn more here).

With all of this in mind, let’s take a gander at the recent action regarding CF Industries Holdings, Inc. (NYSE:CF).

What does the smart money think about CF Industries Holdings, Inc. (NYSE:CF)?

Heading into Q2, a total of 41 of the hedge funds we track held long positions in this stock, a change of -7% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in CF Industries Holdings, Inc. (NYSE:CF). Renaissance Technologies has a $209.5 million position in the stock, comprising 0.5% of its 13F portfolio. On Renaissance Technologies’s heels is Discovery Capital Management, managed by Rob Citrone, which held a $195.7 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, Cliff Asness’s AQR Capital Management and Crispin Odey’s Odey Asset Management Group.

Since CF Industries Holdings, Inc. (NYSE:CF) has witnessed declining sentiment from the smart money, it’s safe to say that there was a specific group of money managers who were dropping their full holdings heading into Q2. At the top of the heap, George Soros’s Soros Fund Management dropped the biggest investment of the 450+ funds we track, totaling close to $90.7 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund sold off about $82.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q2.

What have insiders been doing with CF Industries Holdings, Inc. (NYSE:CF)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, CF Industries Holdings, Inc. (NYSE:CF) has experienced zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to CF Industries Holdings, Inc. (NYSE:CF). These stocks are Syngenta AG (ADR) (NYSE:SYT), Potash Corp./Saskatchewan (USA) (NYSE:POT), Mosaic Co (NYSE:MOS), and Agrium Inc. (USA) (NYSE:AGU). All of these stocks are in the agricultural chemicals industry and their market caps match CF’s market cap.

With the returns demonstrated by our tactics, retail investors must always monitor hedge fund and insider trading activity, and CF Industries Holdings, Inc. (NYSE:CF) is an important part of this process.

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