Hedge Funds Are Dumping Archer Daniels Midland Company (ADM)

Is Archer Daniels Midland Company (NYSE:ADM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Archer Daniels Midland Company (NYSE:ADM) has seen a decrease in hedge fund interest lately. Archer Daniels Midland Company (NYSE:ADM) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. There were 41 hedge funds in our database with ADM positions at the end of the second quarter. Our calculations also showed that ADM 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. Now let’s go over the key hedge fund action regarding Archer Daniels Midland Company (NYSE:ADM).

Tom Gayner

Tom Gayner of Markel Gayner Asset Management

Do Hedge Funds Think ADM Is A Good Stock To Buy Now?

At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -34% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ADM over the last 25 quarters. So, let’s find out 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, Markel Gayner Asset Management, managed by Tom Gayner, holds the number one position in Archer Daniels Midland Company (NYSE:ADM). Markel Gayner Asset Management has a $87.8 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $44.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Murray Stahl’s Horizon Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Mudrick Capital Management allocated the biggest weight to Archer Daniels Midland Company (NYSE:ADM), around 1.34% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, dishing out 1.11 percent of its 13F equity portfolio to ADM.

Because Archer Daniels Midland Company (NYSE:ADM) has faced declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of hedgies that elected to cut their full holdings heading into Q4. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital dumped the biggest stake of the 750 funds watched by Insider Monkey, valued at about $355.8 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $13.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 14 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Archer Daniels Midland Company (NYSE:ADM) but similarly valued. We will take a look at Old Dominion Freight Line (NASDAQ:ODFL), Copart, Inc. (NASDAQ:CPRT), Pinterest, Inc. (NYSE:PINS), Waste Connections, Inc. (NYSE:WCN), CBRE Group, Inc. (NYSE:CBRE), Affirm Holdings, Inc. (NASDAQ:AFRM), and Verisk Analytics, Inc. (NASDAQ:VRSK). All of these stocks’ market caps are closest to ADM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ODFL 33 709810 -14
CPRT 42 998095 -2
PINS 58 2006795 -5
WCN 32 785747 0
CBRE 37 3096989 0
AFRM 39 1491413 14
VRSK 25 1638278 -11
Average 38 1532447 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1532 million. That figure was $351 million in ADM’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand Verisk Analytics, Inc. (NASDAQ:VRSK) is the least popular one with only 25 bullish hedge fund positions. Archer Daniels Midland Company (NYSE:ADM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ADM is 13.8. 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. 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 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately ADM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ADM investors were disappointed as the stock returned 6% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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