Harding Loevner on Deere (DE): “A Growth Company in an Otherwise Mature Cyclical Neighborhood”

Harding Loevner, an investment management firm, published its “Global Equity” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A net return of 13.73% was recorded by the fund in the fourth quarter of 2020, trailing both its MSCI All Country World benchmark that delivered a 14.79% return and its MSCI World Index that had a gain of 14.07% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Harding Loevner, in their Q4 2020 investor letter, mentioned John Deere/Deere & Company (NYSE: DE) and shared their insights on the company. Deere & Company is a Moline, Illinois-based manufacturing company that currently has a $117.3 billion market capitalization. Since the beginning of the year, DE delivered a 39.14% return, impressively extending its 12-month gains to 180.06%. As of March 30, 2021, the stock closed at $373.92 per share.

Here is what Harding Loevner has to say about Deere & Company in their Q4 2020 investor letter:

“In 1837, pioneer blacksmith John Deere invented a new type of plow made from steel that was more effective than existing plows made from cast iron. In 2021, John Deere, the 184-year-old company and undisputed global leader in equipment for row crop agriculture, is again poised to revolutionize the business of farming, this time with precision agriculture technology.

Deere is equipping its machines with the capability to gather and analyze data to improve farmers’ productivity. Its Blue River Technology subsidiary, acquired in 2017, offers a “see and spray” farming implement that uses computer vision to identify and assess individual plants in real time, and to apply herbicides only to weeds and fertilizers only to crops. Trained on millions of images, Blue River’s AI algorithms can instantly distinguish an endless variety of plants and their condition, simultaneously adding to the data set plant genomic and phenotypic information. Deere estimates that farmers will be able to reduce their herbicide application by up to 90% this way, a boon for their profitability, for the environment, and for Deere—as more farms consolidate their operations on the company’s products and services. Early 2020, when Deere plummeted along with other industrials, afforded us an attractive entry point; were Deere just another cyclical company, its stock would still be rebounding in the current value rally, but we see it as something altogether different: a growth company in an otherwise mature cyclical neighborhood.”

Pixabay/Public Domain

Our calculations show that Deere & Company (NYSE: DE) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Deere & Company was in 54 hedge fund portfolios, compared to 42 funds in the third quarter. DIS delivered a 40.65% return in the past 3 months.