How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Bunge Limited (NYSE:BG).
Is Bunge Limited (NYSE:BG) a buy right now? The smart money was becoming less confident. The number of long hedge fund bets dropped by 3 recently. Bunge Limited (NYSE:BG) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that BG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 40 hedge funds in our database with BG holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a peek at the recent hedge fund action surrounding Bunge Limited (NYSE:BG).
Michael Price of MFP Investors
Do Hedge Funds Think BG Is A Good Stock To Buy Now?
At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter of 2021. On the other hand, there were a total of 41 hedge funds with a bullish position in BG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bunge Limited (NYSE:BG) was held by Candlestick Capital Management, which reported holding $94.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $69.9 million position. Other investors bullish on the company included Millennium Management, Alyeska Investment Group, and MFP Investors. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Bunge Limited (NYSE:BG), around 10.7% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, designating 4.09 percent of its 13F equity portfolio to BG.
Since Bunge Limited (NYSE:BG) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of hedge funds who were dropping their positions entirely by the end of the third quarter. Interestingly, Robert Pohly’s Samlyn Capital cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $38.5 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $18.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bunge Limited (NYSE:BG) but similarly valued. We will take a look at Universal Health Services, Inc. (NYSE:UHS), Axon Enterprise, Inc. (NASDAQ:AXON), Lamar Advertising Company (NASDAQ:LAMR), Natura &Co Holding S.A. (NYSE:NTCO), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Regency Centers Corp (NASDAQ:REG), and Cna Financial Corporation (NYSE:CNA). This group of stocks’ market caps resemble BG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UHS | 43 | 751314 | 2 |
| AXON | 32 | 529860 | 8 |
| LAMR | 30 | 445462 | -2 |
| NTCO | 6 | 46852 | 1 |
| CHRW | 20 | 287994 | -11 |
| REG | 19 | 158467 | -6 |
| CNA | 12 | 63809 | -1 |
| Average | 23.1 | 326251 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $539 million in BG’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 6 bullish hedge fund positions. Bunge Limited (NYSE:BG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BG is 65.7. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on BG as the stock returned 7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Bungeltd (NYSE:BG)
Follow Bungeltd (NYSE:BG)
Suggested Articles:
- 15 Biggest Waste Management Companies
- 10 Best Small-Cap Biotech Stocks Under $10 in 2021
- 20 Largest Insurance Companies In The US
Disclosure: None. This article was originally published at Insider Monkey.
