Where Do Hedge Funds Stand On AGCO Corporation (AGCO)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about AGCO Corporation (NYSE:AGCO).

Is AGCO Corporation (NYSE:AGCO) going to take off soon? The smart money was in an optimistic mood. The number of long hedge fund bets improved by 2 recently. AGCO Corporation (NYSE:AGCO) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that AGCO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 36 hedge funds in our database with AGCO holdings at the end of March.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Sander Gerber of Hudson Bay Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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 we’re going to take a peek at the key hedge fund action regarding AGCO Corporation (NYSE:AGCO).

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

Heading into the third quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in AGCO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in AGCO Corporation (NYSE:AGCO) was held by AQR Capital Management, which reported holding $100.9 million worth of stock at the end of June. It was followed by Shellback Capital with a $53 million position. Other investors bullish on the company included Impax Asset Management, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Horseman Capital Management allocated the biggest weight to AGCO Corporation (NYSE:AGCO), around 8.75% of its 13F portfolio. Odey Asset Management Group is also relatively very bullish on the stock, designating 2.97 percent of its 13F equity portfolio to AGCO.

Consequently, some big names were breaking ground themselves. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, assembled the largest position in AGCO Corporation (NYSE:AGCO). Shellback Capital had $53 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $4.4 million position during the quarter. The following funds were also among the new AGCO investors: Ray Dalio’s Bridgewater Associates, Alec Litowitz and Ross Laser’s Magnetar Capital, and Jinghua Yan’s TwinBeech Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as AGCO Corporation (NYSE:AGCO) but similarly valued. We will take a look at Globe Life Inc. (NYSE:GL), Playtika Holding Corp. (NASDAQ:PLTK), Appian Corporation (NASDAQ:APPN), Sasol Limited (NYSE:SSL), UGI Corp (NYSE:UGI), Credicorp Ltd. (NYSE:BAP), and The Middleby Corporation (NASDAQ:MIDD). All of these stocks’ market caps resemble AGCO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $504 million. That figure was $429 million in AGCO’s case. The Middleby Corporation (NASDAQ:MIDD) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks AGCO Corporation (NYSE:AGCO) is more popular among hedge funds. Our overall hedge fund sentiment score for AGCO is 85.5. 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. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately AGCO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AGCO were disappointed as the stock returned -4.4% since the end of the second quarter (through 10/11) 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 since 2019.

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