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Did Hedge Funds Make The Right Call On Corteva, Inc. (CTVA) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Corteva, Inc. (NYSE:CTVA) based on that data and determine whether they were really smart about the stock.

Is Corteva, Inc. (NYSE:CTVA) an excellent investment right now? Prominent investors were in a bullish mood. The number of long hedge fund positions went up by 9 lately. Our calculations also showed that CTVA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are numerous indicators shareholders have at their disposal to appraise stocks. A duo of the most underrated indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce their index-focused peers by a solid amount (see the details here).

Clint Carlson of Carlson Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind let’s analyze the key hedge fund action encompassing Corteva, Inc. (NYSE:CTVA).

What does smart money think about Corteva, Inc. (NYSE:CTVA)?

Heading into the second quarter of 2020, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CTVA a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is CTVA A Good Stock To Buy?

The largest stake in Corteva, Inc. (NYSE:CTVA) was held by Eminence Capital, which reported holding $152.4 million worth of stock at the end of September. It was followed by Sessa Capital with a $149.2 million position. Other investors bullish on the company included Holocene Advisors, Glenview Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to Corteva, Inc. (NYSE:CTVA), around 18.27% of its 13F portfolio. Bronte Capital is also relatively very bullish on the stock, earmarking 3.35 percent of its 13F equity portfolio to CTVA.

As aggregate interest increased, some big names were leading the bulls’ herd. Holocene Advisors, managed by Brandon Haley, initiated the most outsized position in Corteva, Inc. (NYSE:CTVA). Holocene Advisors had $60.2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $19.3 million position during the quarter. The following funds were also among the new CTVA investors: Israel Englander’s Millennium Management, Greg Eisner’s Engineers Gate Manager, and Jinghua Yan’s TwinBeech Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Corteva, Inc. (NYSE:CTVA). We will take a look at Rockwell Automation Inc. (NYSE:ROK), Fortinet Inc (NASDAQ:FTNT), Nokia Corporation (NYSE:NOK), and Dollar Tree, Inc. (NASDAQ:DLTR). All of these stocks’ market caps are closest to CTVA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ROK 37 335488 -2
FTNT 29 1465283 -13
NOK 23 178356 7
DLTR 42 1353619 -9
Average 32.75 833187 -4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $833 million. That figure was $510 million in CTVA’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 23 bullish hedge fund positions. Corteva, Inc. (NYSE:CTVA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately CTVA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CTVA were disappointed as the stock returned 14.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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