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Do Hedge Funds Love Bunge Limited (BG)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Bunge Limited (NYSE:BG).

Bunge Limited (NYSE:BG) has seen a decrease in activity from the world’s largest hedge funds in recent months. BG was in 31 hedge funds’ portfolios at the end of the second quarter of 2019. There were 35 hedge funds in our database with BG positions at the end of the previous quarter. Our calculations also showed that BG isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

BG_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the fresh hedge fund action surrounding Bunge Limited (NYSE:BG).

How have hedgies been trading Bunge Limited (NYSE:BG)?

Heading into the third quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in BG over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

MOORE GLOBAL INVESTMENTS

According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the largest position in Bunge Limited (NYSE:BG), worth close to $145.1 million, accounting for 0.1% of its total 13F portfolio. On Citadel Investment Group’s heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $60.7 million position; 0.2% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish include Renaissance Technologies, Louis Bacon’s Moore Global Investments and Clint Carlson’s Carlson Capital.

Seeing as Bunge Limited (NYSE:BG) has faced falling interest from the smart money, logic holds that there were a few funds that slashed their entire stakes last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $53.9 million in call options. Israel Englander’s fund, Millennium Management, also dropped its call options, about $14.3 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Bunge Limited (NYSE:BG). We will take a look at Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Voya Financial Inc (NYSE:VOYA), US Foods Holding Corp. (NYSE:USFD), and Gildan Activewear Inc (NYSE:GIL). All of these stocks’ market caps are closest to BG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MBT 8 448588 -5
VOYA 43 1323923 -2
USFD 39 1399158 -1
GIL 24 551244 -3
Average 28.5 930728 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $931 million. That figure was $693 million in BG’s case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company (NYSE:MBT) is the least popular one with only 8 bullish hedge fund positions. Bunge Limited (NYSE:BG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BG, though not to the same extent, as the stock returned 2.6% during the third quarter and outperformed the market as well.

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

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