CF Industries Holdings, Inc. (NYSE:CF)’s stock is down over 5% after three investment banks downgraded the stock today. The analysts at Cleveland Research downgraded CF to ‘Neutral’ from ‘Buy’, while the analysts at Scotiabank lowered their rating to ‘Sector Perform’ from ‘Outperform’. The professionals at Bank of America were the most bearish, lowering their rating to ‘Underperform’ from ‘Neutral’. The analyst downgrades follow yesterday’s news that CF Industries Holdings, Inc. (NYSE:CF) terminated its acquisition of some of OCI’s assets due to unfavorable changes in tax inversion rules. The market was hoping for substantial synergies that now won’t be realized.
Is CF Industries Holdings, Inc. (NYSE:CF) a good investment today? The best stock pickers are selling. The number of bullish hedge fund positions dropped by five lately. CF Industries Holdings, Inc. (NYSE:CF) was in the equity portfolios of 32 funds in our database at the end of March. At the end of this article we will also compare CF to other stocks, including Xylem Inc (NYSE:XYL), Westinghouse Air Brake Technologies Corp (NYSE:WAB), and F5 Networks, Inc. (NASDAQ:FFIV) to get a better sense of its popularity.
Follow Cf Industries Holdings Inc. (NYSE:CF)
Follow Cf Industries Holdings Inc. (NYSE:CF)
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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Passport Capital, managed by John Burbank, holds the largest position in CF Industries Holdings, Inc. (NYSE:CF). Passport Capital has a $349.8 million position in the stock, comprising 5.7% of its 13F portfolio. Sitting at the No. 2 spot is David E. Shaw’s D E Shaw, with a $218.4 million position; 0.4% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Robert Polak’s Anchor Bolt Capital and Thomas Steyer’s Farallon Capital.
On the next page, we are going to take a closer look at some funds that decided to close their positions in CF Industries during the first three months of 2016.
Judging by the fact that CF Industries Holdings, Inc. (NYSE:CF) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that slashed their entire stakes last quarter. It’s worth mentioning that Robert Pitts’ Steadfast Capital Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $42.9 million in stock, and Kenney Y. Oh’s SeaStone Capital Management was right behind this move, as the fund said goodbye to about $15.8 million worth. These moves are important to note, as aggregate hedge fund interest fell by 5 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CF Industries Holdings, Inc. (NYSE:CF) but similarly valued. We will take a look at Xylem Inc (NYSE:XYL), Westinghouse Air Brake Technologies Corp (NYSE:WAB), F5 Networks, Inc. (NASDAQ:FFIV), and Signature Bank (NASDAQ:SBNY). All of these stocks’ market caps resemble CF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XYL | 26 | 510887 | 10 |
| WAB | 19 | 229412 | -8 |
| FFIV | 28 | 1006740 | -5 |
| SBNY | 21 | 405718 | 4 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $538 million. That figure was $1021 million in CF’s case. F5 Networks, Inc. (NASDAQ:FFIV) is the most popular stock in this table. On the other hand Westinghouse Air Brake Technologies Corp (NYSE:WAB) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks CF Industries Holdings, Inc. (NYSE:CF) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
