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Hedge Funds Are Dumping AGCO Corporation (AGCO)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of AGCO Corporation (NYSE:AGCO).

Is AGCO Corporation (NYSE:AGCO) the right investment to pursue these days? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 9 lately. Our calculations also showed that AGCO 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). AGCO was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. There were 28 hedge funds in our database with AGCO holdings at the end of the previous quarter.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the fresh hedge fund action regarding AGCO Corporation (NYSE:AGCO).

Hedge fund activity in AGCO Corporation (NYSE:AGCO)

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AGCO over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in AGCO Corporation (NYSE:AGCO), which was worth $51.1 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $15.6 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and Lodge Hill Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to AGCO Corporation (NYSE:AGCO), around 4.67% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to AGCO.

Due to the fact that AGCO Corporation (NYSE:AGCO) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of money managers that decided to sell off their full holdings by the end of the first quarter. Intriguingly, Lee Ainslie’s Maverick Capital cut the biggest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $60.5 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund said goodbye to about $17.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 9 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as AGCO Corporation (NYSE:AGCO) but similarly valued. These stocks are TerraForm Power Inc (NASDAQ:TERP), Graphic Packaging Holding Company (NYSE:GPK), Neogen Corporation (NASDAQ:NEOG), and Leggett & Platt, Inc. (NYSE:LEG). This group of stocks’ market caps resemble AGCO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TERP 17 217631 2
GPK 33 340462 -6
NEOG 16 33336 0
LEG 25 70786 -2
Average 22.75 165554 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $126 million in AGCO’s case. Graphic Packaging Holding Company (NYSE:GPK) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 16 bullish hedge fund positions. AGCO Corporation (NYSE:AGCO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately AGCO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AGCO investors were disappointed as the stock returned 15.1% during the second quarter 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 most of these stocks already outperformed the market in 2020.

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