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Smart Money Is Losing Confidence In Deere & Company (DE)

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Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Deere & Company (NYSE:DE).

Deere & Company (NYSE:DE) was in 27 hedge funds’ portfolios at the end of September. DE has seen a decrease in activity from the world’s largest hedge funds lately. There were 33 hedge funds in our database with DE positions at the end of the previous quarter. At the end of this article we will also compare DE to other stocks including Cardinal Health, Inc. (NYSE:CAH), Edison International (NYSE:EIX), and LinkedIn Corp (NYSE:LNKD) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with Deere & Company (NYSE:DE)?

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 18% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the biggest position in Deere & Company (NYSE:DE), worth close to $1.8 billion, accounting for 1.4% of its total 13F portfolio. The second most bullish fund manager is Generation Investment Management, led by David Blood and Al Gore, holding a $583.6 million position; 6.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Bob Peck and Andy Raab’s FPR Partners, Jim Simons’ Renaissance Technologies and Gabriel Plotkin’s Melvin Capital Management.

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