Should I Avoid General Mills, Inc. (GIS)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards General Mills, Inc. (NYSE:GIS).

General Mills, Inc. (NYSE:GIS) investors should be aware of a decrease in enthusiasm from smart money recently. General Mills, Inc. (NYSE:GIS) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 42. There were 39 hedge funds in our database with GIS holdings at the end of December. Our calculations also showed that GIS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are a multitude of tools shareholders can use to grade stocks. A couple of the most useful tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Now let’s take a glance at the fresh hedge fund action surrounding General Mills, Inc. (NYSE:GIS).

Do Hedge Funds Think GIS Is A Good Stock To Buy Now?

At the end of March, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in GIS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in General Mills, Inc. (NYSE:GIS), which was worth $183.4 million at the end of the fourth quarter. On the second spot was Two Sigma Advisors which amassed $176 million worth of shares. AQR Capital Management, Alkeon Capital Management, and Arrowstreet Capital 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 Half Sky Capital allocated the biggest weight to General Mills, Inc. (NYSE:GIS), around 16.06% of its 13F portfolio. Kehrs Ridge Capital is also relatively very bullish on the stock, designating 6.22 percent of its 13F equity portfolio to GIS.

Judging by the fact that General Mills, Inc. (NYSE:GIS) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds who sold off their full holdings last quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $8.9 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dumped about $4.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to General Mills, Inc. (NYSE:GIS). We will take a look at Simon Property Group, Inc (NYSE:SPG), Aptiv PLC (NYSE:APTV), Centene Corporation (NYSE:CNC), IQVIA Holdings, Inc. (NYSE:IQV), CRH PLC (NYSE:CRH), Mizuho Financial Group Inc. (NYSE:MFG), and Carrier Global Corporation (NYSE:CARR). This group of stocks’ market caps are similar to GIS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1522 million. That figure was $797 million in GIS’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GIS is 41.9. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately GIS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GIS investors were disappointed as the stock returned -1% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.