During the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 7 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Fresh Del Monte Produce Inc (NYSE:FDP) and see how the stock is affected by the recent hedge fund activity.
Is Fresh Del Monte Produce Inc (NYSE:FDP) a buy, sell, or hold? Prominent investors are getting more optimistic. The number of long hedge fund positions went up by 1 recently. Our calculations also showed that FDP isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action regarding Fresh Del Monte Produce Inc (NYSE:FDP).
How have hedgies been trading Fresh Del Monte Produce Inc (NYSE:FDP)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards FDP over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Fresh Del Monte Produce Inc (NYSE:FDP). Renaissance Technologies has a $22.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $5.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Noam Gottesman’s GLG Partners.
As one would reasonably expect, specific money managers have been driving this bullishness. GLG Partners, managed by Noam Gottesman, initiated the largest position in Fresh Del Monte Produce Inc (NYSE:FDP). GLG Partners had $2.3 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $0.8 million position during the quarter. The other funds with brand new FDP positions are Thomas Bailard’s Bailard Inc, John Overdeck and David Siegel’s Two Sigma Advisors, and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks similar to Fresh Del Monte Produce Inc (NYSE:FDP). These stocks are Matson, Inc. (NYSE:MATX), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Shutterfly, Inc. (NASDAQ:SFLY), and Universal Corp (NYSE:UVV). This group of stocks’ market caps match FDP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MATX | 12 | 17426 | 3 |
| KLIC | 19 | 243689 | -3 |
| SFLY | 22 | 367739 | -1 |
| UVV | 15 | 104264 | -1 |
| Average | 17 | 183280 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $43 million in FDP’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table. On the other hand Alexander & Baldwin Holdings Inc (NYSE:MATX) is the least popular one with only 12 bullish hedge fund positions. Fresh Del Monte Produce Inc (NYSE:FDP) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FDP wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); FDP investors were disappointed as the stock returned -6.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
