Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 20% in 2019 (through September 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 24% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Corteva, Inc. (NYSE:CTVA).
Corteva, Inc. (NYSE:CTVA) investors should pay attention to an increase in support from the world’s most elite money managers of late. Our calculations also showed that CTVA isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are dozens of metrics market participants put to use to analyze publicly traded companies. A duo of the most innovative metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce their index-focused peers by a very impressive margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action surrounding Corteva, Inc. (NYSE:CTVA).
How are hedge funds trading Corteva, Inc. (NYSE:CTVA)?
At the end of the second quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CTVA over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Corteva, Inc. (NYSE:CTVA). D E Shaw has a $120.5 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Maverick Capital, managed by Lee Ainslie, which holds a $97.9 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise John Petry’s Sessa Capital, David Rosen’s Rubric Capital Management and Benjamin A. Smith’s Laurion Capital Management.
As one would reasonably expect, some big names have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the most outsized position in Corteva, Inc. (NYSE:CTVA). D E Shaw had $120.5 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $97.9 million investment in the stock during the quarter. The other funds with brand new CTVA positions are John Petry’s Sessa Capital, David Rosen’s Rubric Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to Corteva, Inc. (NYSE:CTVA). These stocks are Microchip Technology Incorporated (NASDAQ:MCHP), Centene Corp (NYSE:CNC), Mettler-Toledo International Inc. (NYSE:MTD), and Imperial Oil Limited (NYSEAMEX:IMO). This group of stocks’ market caps resemble CTVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCHP | 26 | 500462 | -6 |
| CNC | 65 | 2992011 | 7 |
| MTD | 20 | 318889 | 2 |
| IMO | 12 | 48343 | -5 |
| Average | 30.75 | 964926 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $965 million. That figure was $616 million in CTVA’s case. Centene Corp (NYSE:CNC) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSEAMEX:IMO) is the least popular one with only 12 bullish hedge fund positions. Corteva, Inc. (NYSE:CTVA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CTVA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CTVA were disappointed as the stock returned -4.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.