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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on CF Industries Holdings, Inc. (NYSE:CF) .
CF Industries Holdings, Inc. (NYSE:CF) investors should pay attention to an increase in support from the world’s most successful money managers in recent months. There were 34 hedge funds in our database with CF holdings at the end of the previous quarter. At the end of this article we will also compare CF to other stocks including Vail Resorts, Inc. (NYSE:MTN), VCA Antech Inc (NASDAQ:WOOF), and Signet Jewelers Ltd. (NYSE:SIG) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
With all of this in mind, we’re going to view the new action surrounding CF Industries Holdings, Inc. (NYSE:CF).
How are hedge funds trading CF Industries Holdings, Inc. (NYSE:CF)?
Heading into the fourth quarter of 2016, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CF over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, led by Phill Gross and Robert Atchinson, holds the largest position in CF Industries Holdings, Inc. (NYSE:CF). Adage Capital Management has a $160.1 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Jonathon Jacobson of Highfields Capital Management, with a $155.9 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise Ricky Sandler’s Eminence Capital, David Cohen and Harold Levy’s Iridian Asset Management and John Burbank’s Passport Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Iridian Asset Management, led by David Cohen and Harold Levy, created the biggest position in CF Industries Holdings, Inc. (NYSE:CF). Iridian Asset Management had $110.3 million invested in the company at the end of the quarter. Kevin D. Eng’s Columbus Hill Capital Management also initiated a $39.2 million position during the quarter. The following funds were also among the new CF investors: John Osterweis’s Osterweis Capital Management, Steve Cohen’s Point72 Asset Management, and Steve Pei’s Gratia Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CF Industries Holdings, Inc. (NYSE:CF) but similarly valued. We will take a look at Vail Resorts, Inc. (NYSE:MTN), VCA Antech Inc (NASDAQ:WOOF), Signet Jewelers Ltd. (NYSE:SIG), and Veeva Systems Inc (NYSE:VEEV). This group of stocks’ market values are similar to CF’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $841 million. That figure was $1022 million in CF’s case. Signet Jewelers Ltd. (NYSE:SIG) is the most popular stock in this table. On the other hand Veeva Systems Inc (NYSE:VEEV) is the least popular one with only 23 bullish hedge fund positions. CF Industries Holdings, Inc. (NYSE:CF) 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. In this regard SIG might be a better candidate to consider taking a long position in.