In this article we will take a look at whether hedge funds think S&P Global Inc. (NYSE:SPGI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is SPGI stock a buy or sell? S&P Global Inc. (NYSE:SPGI) has seen an increase in support from the world’s most elite money managers of late. S&P Global Inc. (NYSE:SPGI) was in 75 hedge funds’ portfolios at the end of December. The all time high for this statistic is 76. There were 71 hedge funds in our database with SPGI positions at the end of the third quarter. Our calculations also showed that SPGI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dan Loeb of Third Point
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now 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 (or at the end of this article). Keeping this in mind we’re going to view the key hedge fund action regarding S&P Global Inc. (NYSE:SPGI).
Do Hedge Funds Think SPGI Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 75 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SPGI over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cantillon Capital Management was the largest shareholder of S&P Global Inc. (NYSE:SPGI), with a stake worth $853.3 million reported as of the end of December. Trailing Cantillon Capital Management was Third Point, which amassed a stake valued at $295.9 million. Renaissance Technologies, Valley Forge Capital, and Melvin Capital Management 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 Rings Capital Management allocated the biggest weight to S&P Global Inc. (NYSE:SPGI), around 43.81% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, earmarking 19.71 percent of its 13F equity portfolio to SPGI.
Now, key money managers have been driving this bullishness. Melvin Capital Management, managed by Gabriel Plotkin, assembled the most outsized position in S&P Global Inc. (NYSE:SPGI). Melvin Capital Management had $147.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $117.3 million investment in the stock during the quarter. The following funds were also among the new SPGI investors: Ken Griffin’s Citadel Investment Group, Jeff Lignelli’s Incline Global Management, and Anand Parekh’s Alyeska Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to S&P Global Inc. (NYSE:SPGI). We will take a look at Applied Materials, Inc. (NASDAQ:AMAT), Zoetis Inc (NYSE:ZTS), Canadian National Railway Company (NYSE:CNI), Altria Group Inc (NYSE:MO), Fiserv, Inc. (NASDAQ:FISV), NIO Inc. (NYSE:NIO), and Automatic Data Processing (NASDAQ:ADP). This group of stocks’ market values match SPGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMAT | 61 | 3632227 | 2 |
| ZTS | 61 | 2389697 | 3 |
| CNI | 31 | 2188963 | 5 |
| MO | 37 | 1082661 | -10 |
| FISV | 94 | 5178126 | 4 |
| NIO | 34 | 2634013 | -1 |
| ADP | 48 | 3064769 | 6 |
| Average | 52.3 | 2881494 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.3 hedge funds with bullish positions and the average amount invested in these stocks was $2881 million. That figure was $3808 million in SPGI’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Canadian National Railway Company (NYSE:CNI) is the least popular one with only 31 bullish hedge fund positions. S&P Global Inc. (NYSE:SPGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPGI is 73.5. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately SPGI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SPGI were disappointed as the stock returned 5.4% since the end of December (through 3/12) and slightly underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
