We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards General Mills, Inc. (NYSE:GIS) and determine whether hedge funds skillfully traded this stock.
General Mills, Inc. (NYSE:GIS) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 42. GIS has seen a decrease in hedge fund sentiment lately. There were 37 hedge funds in our database with GIS holdings at the end of June. Our calculations also showed that GIS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to view the latest hedge fund action regarding General Mills, Inc. (NYSE:GIS).
Steven Cohen of Point72 Asset Management
Do Hedge Funds Think GIS Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GIS over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the biggest position in General Mills, Inc. (NYSE:GIS). Renaissance Technologies has a $255.5 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Panayotis Takis Sparaggis of Alkeon Capital Management, with a $119.6 million call position; 0.2% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to General Mills, Inc. (NYSE:GIS), around 14.89% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, setting aside 1.97 percent of its 13F equity portfolio to GIS.
Since General Mills, Inc. (NYSE:GIS) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers that elected to cut their entire stakes last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest position of all the hedgies followed by Insider Monkey, comprising about $36.8 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $20 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as General Mills, Inc. (NYSE:GIS) but similarly valued. These stocks are SBA Communications Corporation (NASDAQ:SBAC), Yum! Brands, Inc. (NYSE:YUM), Cloudflare, Inc. (NYSE:NET), Mizuho Financial Group Inc. (NYSE:MFG), Robinhood Markets Inc. (NASDAQ:HOOD), Parker-Hannifin Corporation (NYSE:PH), and AutoZone, Inc. (NYSE:AZO). This group of stocks’ market valuations are closest to GIS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBAC | 36 | 1893871 | -7 |
| YUM | 38 | 757636 | 3 |
| NET | 50 | 958432 | 7 |
| MFG | 6 | 13164 | 0 |
| HOOD | 20 | 4685841 | 20 |
| PH | 39 | 1973795 | -3 |
| AZO | 35 | 1020383 | 1 |
| Average | 32 | 1614732 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1615 million. That figure was $732 million in GIS’s case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GIS is 52.4. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on GIS as the stock returned 16.6% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
