We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded General Mills, Inc. (NYSE:GIS) based on those filings.
Hedge fund interest in General Mills, Inc. (NYSE:GIS) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Amphenol Corporation (NYSE:APH), TE Connectivity Ltd. (NYSE:TEL), and CRH PLC (NYSE:CRH) to gather more data points. Our calculations also showed that GIS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the latest hedge fund action regarding General Mills, Inc. (NYSE:GIS).
What does smart money think about General Mills, Inc. (NYSE:GIS)?
Heading into the first quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in GIS over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of General Mills, Inc. (NYSE:GIS), with a stake worth $250.5 million reported as of the end of September. Trailing Renaissance Technologies was Iridian Asset Management, which amassed a stake valued at $184.6 million. Alkeon Capital Management, D E Shaw, and Two Sigma Advisors 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 Iridian Asset Management allocated the biggest weight to General Mills, Inc. (NYSE:GIS), around 3.02% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, dishing out 1.86 percent of its 13F equity portfolio to GIS.
Seeing as General Mills, Inc. (NYSE:GIS) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who sold off their positions entirely in the third quarter. Interestingly, Bruce Kovner’s Caxton Associates LP dropped the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $5 million in stock. Joseph A. Jolson’s fund, Harvest Capital Strategies, also dumped its stock, about $4.4 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as General Mills, Inc. (NYSE:GIS) but similarly valued. We will take a look at Amphenol Corporation (NYSE:APH), TE Connectivity Ltd. (NYSE:TEL), CRH PLC (NYSE:CRH), and Ingersoll Rand Inc. (NYSE:IR). This group of stocks’ market caps are closest to GIS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APH | 36 | 715909 | 3 |
| TEL | 44 | 1839961 | 10 |
| CRH | 5 | 184422 | -4 |
| IR | 47 | 1411941 | 2 |
| Average | 33 | 1038058 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $907 million in GIS’s case. Ingersoll Rand Inc. (NYSE:IR) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 5 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. Hedge funds were also right about betting on GIS as the stock returned 13.3% in 2020 (through May 1st) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
