Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Farmland Partners Inc (NYSE:FPI) based on that data.
Farmland Partners Inc (NYSE:FPI) investors should be aware of an increase in hedge fund interest lately. Our calculations also showed that FPI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
J. Alan Reid, Jr. of Forward Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the new hedge fund action surrounding Farmland Partners Inc (NYSE:FPI).
Hedge fund activity in Farmland Partners Inc (NYSE:FPI)
At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FPI over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, D. E. Shaw’s D E Shaw has the most valuable position in Farmland Partners Inc (NYSE:FPI), worth close to $1.4 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Forward Management, led by J. Alan Reid, Jr., holding a $0.5 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions include Chase Coleman’s Tiger Global Management LLC, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Forward Management allocated the biggest weight to Farmland Partners Inc (NYSE:FPI), around 0.11% of its 13F portfolio. D E Shaw is also relatively very bullish on the stock, earmarking 0.0022 percent of its 13F equity portfolio to FPI.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Farmland Partners Inc (NYSE:FPI). Arrowstreet Capital had $0.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0 million position during the quarter.
Let’s go over hedge fund activity in other stocks similar to Farmland Partners Inc (NYSE:FPI). We will take a look at Standard Diversified Inc. (NYSE:SDI), Business First Bancshares, Inc. (NASDAQ:BFST), Gold Resource Corporation (NYSE:GORO), and Donnelley Financial Solutions, Inc. (NYSE:DFIN). This group of stocks’ market valuations resemble FPI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SDI | 5 | 7158 | 1 |
| BFST | 4 | 8748 | 1 |
| GORO | 6 | 3215 | 1 |
| DFIN | 18 | 27554 | -4 |
| Average | 8.25 | 11669 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $3 million in FPI’s case. Donnelley Financial Solutions, Inc. (NYSE:DFIN) is the most popular stock in this table. On the other hand Business First Bancshares, Inc. (NASDAQ:BFST) is the least popular one with only 4 bullish hedge fund positions. Farmland Partners Inc (NYSE:FPI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately FPI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FPI investors were disappointed as the stock returned 12.9% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
