Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards 3M Company (NYSE:MMM).
Is 3M Company (NYSE:MMM) a good investment today? The best stock pickers were getting more bullish. The number of bullish hedge fund positions advanced by 1 lately. 3M Company (NYSE:MMM) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistic is 56. Our calculations also showed that MMM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 41 hedge funds in our database with MMM holdings at the end of March.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s go over the recent hedge fund action surrounding 3M Company (NYSE:MMM).
Do Hedge Funds Think MMM Is A Good Stock To Buy Now?
At the end of June, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MMM over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of 3M Company (NYSE:MMM), with a stake worth $1071.2 million reported as of the end of June. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $235.5 million. Citadel Investment Group, Citadel Investment Group, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Hourglass Capital allocated the biggest weight to 3M Company (NYSE:MMM), around 1.27% of its 13F portfolio. Arjuna Capital is also relatively very bullish on the stock, designating 0.88 percent of its 13F equity portfolio to MMM.
Now, some big names have been driving this bullishness. Centiva Capital, managed by Karim Abbadi and Edward McBride, established the biggest position in 3M Company (NYSE:MMM). Centiva Capital had $3 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also made a $3 million investment in the stock during the quarter. The other funds with brand new MMM positions are Karim Abbadi and Edward McBride’s Centiva Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 3M Company (NYSE:MMM) but similarly valued. These stocks are Advanced Micro Devices, Inc. (NASDAQ:AMD), Zoom Video Communications, Inc. (NASDAQ:ZM), Diageo plc (NYSE:DEO), Square, Inc. (NYSE:SQ), Deere & Company (NYSE:DE), CVS Health Corporation (NYSE:CVS), and Intuitive Surgical, Inc. (NASDAQ:ISRG). This group of stocks’ market valuations resemble MMM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMD | 63 | 4610011 | 1 |
| ZM | 59 | 8480712 | 5 |
| DEO | 20 | 891081 | -2 |
| SQ | 94 | 10327761 | 2 |
| DE | 52 | 2173962 | 1 |
| CVS | 67 | 1355477 | 5 |
| ISRG | 60 | 3475820 | 7 |
| Average | 59.3 | 4473546 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59.3 hedge funds with bullish positions and the average amount invested in these stocks was $4474 million. That figure was $1583 million in MMM’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 20 bullish hedge fund positions. 3M Company (NYSE:MMM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMM is 43.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and surpassed the market again by 5.6 percentage points. Unfortunately MMM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MMM investors were disappointed as the stock returned -10.4% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
