Is Andersons Inc (ANDE) A Good Stock To Buy?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Andersons Inc (NASDAQ:ANDE) a buy right now? Money managers are definitely taking a bullish view. The number of bullish hedge fund bets experienced an increase of 3 recently. There were 12 hedge funds in our database with ANDE holdings at the end of the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Repligen Corporation (NASDAQ:RGEN), Royce Value Trust Inc (NYSE:RVT), and Safety Insurance Group, Inc. (NASDAQ:SAFT) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Now, let’s take a peek at the fresh action regarding Andersons Inc (NASDAQ:ANDE).

How have hedgies been trading Andersons Inc (NASDAQ:ANDE)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ANDE over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Point72 Asset Management, led by Steve Cohen, holds the number one position in Andersons Inc (NASDAQ:ANDE). According to regulatory filings, the fund has a $20 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, holding a $17.2 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, Alexander Mitchell’s Scopus Asset Management and Philip Hempleman’s Ardsley Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, some big names have jumped into Andersons Inc (NASDAQ:ANDE) headfirst. Citadel Investment Group, led by Ken Griffin, assembled the most outsized position in Andersons Inc (NASDAQ:ANDE). According to its latest 13F filing, the fund had $1.6 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal’s Luminus Management also initiated a $0.4 million position during the quarter. The following funds were also among the new ANDE investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Mike Vranos’s Ellington.

Let’s check out hedge fund activity in other stocks similar to Andersons Inc (NASDAQ:ANDE). These stocks are Repligen Corporation (NASDAQ:RGEN), Royce Value Trust Inc (NYSE:RVT), Safety Insurance Group, Inc. (NASDAQ:SAFT), and Ixia (NASDAQ:XXIA). This group of stocks’ market valuations resemble ANDE’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $49 million in ANDE’s case. Ixia (NASDAQ:XXIA) is the most popular stock in this table. On the other hand Royce Value Trust Inc (NYSE:RVT) is the least popular one with only 5 bullish hedge fund positions. Andersons Inc (NASDAQ:ANDE) 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. In this regard XXIA might be a better candidate to consider taking a long position in.

Disclosure: none.