Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Deere & Company (NYSE:DE) changed recently.
Is DE stock a buy or sell? Deere & Company (NYSE:DE) was in 54 hedge funds’ portfolios at the end of December. The all time high for this statistic is 51. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DE has seen an increase in support from the world’s most elite money managers lately. There were 42 hedge funds in our database with DE holdings at the end of September. Our calculations also showed that DE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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. 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 124 percentage points since March 2017 (see the details here).
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Keeping this in mind let’s take a glance at the fresh hedge fund action encompassing Deere & Company (NYSE:DE).
Do Hedge Funds Think DE Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 54 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 50 hedge funds with a bullish position in DE a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Greenhaven Associates, managed by Edgar Wachenheim, holds the number one position in Deere & Company (NYSE:DE). Greenhaven Associates has a $384.8 million position in the stock, comprising 7.2% of its 13F portfolio. The second most bullish fund manager is Markel Gayner Asset Management, led by Tom Gayner, holding a $203.3 million position; the fund has 3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions comprise Ian Simm’s Impax Asset Management, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Engine No. 1 LLC allocated the biggest weight to Deere & Company (NYSE:DE), around 8.86% of its 13F portfolio. Greenhaven Associates is also relatively very bullish on the stock, earmarking 7.25 percent of its 13F equity portfolio to DE.
As aggregate interest increased, specific money managers have been driving this bullishness. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, established the biggest position in Deere & Company (NYSE:DE). Shellback Capital had $45.7 million invested in the company at the end of the quarter. Chris James’s Engine No. 1 LLC also initiated a $20.5 million position during the quarter. The other funds with brand new DE positions are Renaissance Technologies, Till Bechtolsheimer’s Arosa Capital Management, and Qing Li’s Sciencast Management.
Let’s also examine hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). We will take a look at Micron Technology, Inc. (NASDAQ:MU), Mondelez International Inc (NASDAQ:MDLZ), Mercadolibre Inc (NASDAQ:MELI), The TJX Companies, Inc. (NYSE:TJX), Anthem Inc (NYSE:ANTM), Snowflake Inc (NYSE:SNOW), and S&P Global Inc. (NYSE:SPGI). This group of stocks’ market caps match DE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MU | 100 | 8144429 | 21 |
| MDLZ | 50 | 2626457 | 0 |
| MELI | 79 | 8766711 | -2 |
| TJX | 68 | 2297227 | -10 |
| ANTM | 70 | 5186728 | 5 |
| SNOW | 54 | 7723382 | -5 |
| SPGI | 75 | 3807859 | 4 |
| Average | 70.9 | 5507542 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 70.9 hedge funds with bullish positions and the average amount invested in these stocks was $5508 million. That figure was $1804 million in DE’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand Mondelez International Inc (NASDAQ:MDLZ) is the least popular one with only 50 bullish hedge fund positions. Deere & Company (NYSE:DE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DE is 44. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. A small number of hedge funds were also right about betting on DE as the stock returned 38.4% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
