In this article we will check out the progression of hedge fund sentiment towards Deere & Company (NYSE:DE) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Deere & Company (NYSE:DE) going to take off soon? Investors who are in the know were taking an optimistic view. The number of bullish hedge fund bets rose by 1 in recent months. Deere & Company (NYSE:DE) was in 52 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 54. Our calculations also showed that DE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Tom Gayner of Markel Gayner Asset Management
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Do Hedge Funds Think DE Is A Good Stock To Buy Now?
At Q2’s end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in DE 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, Viking Global held the most valuable stake in Deere & Company (NYSE:DE), which was worth $454.1 million at the end of the second quarter. On the second spot was Markel Gayner Asset Management which amassed $266.6 million worth of shares. Citadel Investment Group, Diamond Hill Capital, and Impax Asset 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 Horseman Capital Management allocated the biggest weight to Deere & Company (NYSE:DE), around 7.27% of its 13F portfolio. Engine No. 1 LLC is also relatively very bullish on the stock, designating 5.5 percent of its 13F equity portfolio to DE.
As aggregate interest increased, some big names have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, established the most outsized position in Deere & Company (NYSE:DE). Bridgewater Associates had $26.6 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $21.2 million position during the quarter. The following funds were also among the new DE investors: Dmitry Balyasny’s Balyasny Asset Management, Brad Farber’s Atika Capital, and Dan Kozlowski’s Plaisance Capital.
Let’s now review hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). These stocks are CVS Health Corporation (NYSE:CVS), Intuitive Surgical, Inc. (NASDAQ:ISRG), ServiceNow Inc (NYSE:NOW), Snap Inc. (NYSE:SNAP), Lockheed Martin Corporation (NYSE:LMT), GlaxoSmithKline plc (NYSE:GSK), and S&P Global Inc. (NYSE:SPGI). This group of stocks’ market values resemble DE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVS | 67 | 1355477 | 5 |
| ISRG | 60 | 3475820 | 7 |
| NOW | 91 | 7011424 | -7 |
| SNAP | 64 | 5399955 | -9 |
| LMT | 58 | 1565723 | 8 |
| GSK | 28 | 1466364 | 3 |
| SPGI | 71 | 7278360 | 5 |
| Average | 62.7 | 3936160 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 62.7 hedge funds with bullish positions and the average amount invested in these stocks was $3936 million. That figure was $2174 million in DE’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 28 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 53.9. 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 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately DE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DE investors were disappointed as the stock returned 1% since the end of June (through 11/5) 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.
Follow Deere & Co (NYSE:DE)
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Disclosure: None. This article was originally published at Insider Monkey.
