The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Canadian National Railway (USA) (NYSE:CNI).
Is Canadian National Railway (USA) (NYSE:CNI) the right pick for your portfolio? The smart money is becoming less confident. The number of bullish hedge fund positions dropped by 4 recently. 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 General Dynamics Corporation (NYSE:GD), NextEra Energy, Inc. (NYSE:NEE), and Infosys Ltd ADR (NYSE:INFY) to gather more data points.
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Follow Canadian National Railway Co (NYSE:CNI)
At the moment there are a multitude of metrics shareholders use to analyze stocks. A couple of the less utilized metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can outperform the S&P 500 by a healthy amount (see the details here).
With all of this in mind, we’re going to view the new action surrounding Canadian National Railway (USA) (NYSE:CNI).
How are hedge funds trading Canadian National Railway (USA) (NYSE:CNI)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Bill & Melinda Gates Foundation Trust, managed by Michael Larson, holds the most valuable position in Canadian National Railway (USA) (NYSE:CNI). Bill & Melinda Gates Foundation Trust has a $972.1 million position in the stock, comprising 5.6% of its 13F portfolio. The second largest stake is held by Tetrem Capital Management, managed by Daniel Bubis, which holds a $92.9 million position; 3.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass D E Shaw, Cliff Asness’s AQR Capital Management and Ken Fisher’s Fisher Asset Management.
Judging by the fact that Canadian National Railway (USA) (NYSE:CNI) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management sold off the largest stake of all the hedgies followed by Insider Monkey, comprising close to $26 million in stock, and Jonathan Barrett and Paul Segal’s Luminus Management was right behind this move, as the fund said goodbye to about $14.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Canadian National Railway (USA) (NYSE:CNI) but similarly valued. These stocks are General Dynamics Corporation (NYSE:GD), NextEra Energy, Inc. (NYSE:NEE), Infosys Ltd ADR (NYSE:INFY), and Netflix, Inc. (NASDAQ:NFLX). This group of stocks’ market values are similar to CNI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GD | 43 | 6049744 | 3 |
| NEE | 43 | 1811341 | 5 |
| INFY | 19 | 892333 | 2 |
| NFLX | 57 | 6509142 | 7 |
As you can see these stocks had an average of 40.5 hedge funds with bullish positions and the average amount invested in these stocks was $3816 million. That figure was $1297 million in CNI’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Infosys Ltd ADR (NYSE:INFY) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Canadian National Railway (USA) (NYSE:CNI) is even less popular than INFY. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
