While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Deere & Company (NYSE:DE).
Deere & Company (NYSE:DE) has seen an increase in hedge fund sentiment of late. Deere & Company (NYSE:DE) was in 54 hedge funds’ portfolios at the end of September. The all time high for this statistic is 54. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DE 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 take a glance at the latest hedge fund action surrounding Deere & Company (NYSE:DE).
Tom Gayner of Markel Gayner Asset Management
Do Hedge Funds Think DE Is A Good Stock To Buy Now?
At third quarter’s end, a total of 54 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DE over the last 25 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.
The largest stake in Deere & Company (NYSE:DE) was held by Bill & Melinda Gates Foundation Trust, which reported holding $346.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $256.9 million position. Other investors bullish on the company included Markel Gayner Asset Management, Viking Global, and Holocene Advisors. In terms of the portfolio weights assigned to each position Engine No. 1 LLC allocated the biggest weight to Deere & Company (NYSE:DE), around 4.93% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, designating 3.2 percent of its 13F equity portfolio to DE.
Now, some big names have been driving this bullishness. Bill & Melinda Gates Foundation Trust, managed by Michael Larson, initiated the most outsized position in Deere & Company (NYSE:DE). Bill & Melinda Gates Foundation Trust had $346.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $53.9 million position during the quarter. The following funds were also among the new DE investors: Michael Gelband’s ExodusPoint Capital, Gregg Moskowitz’s Interval Partners, and Peter Avellone’s Cartenna Capital.
Let’s now review hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). These stocks are S&P Global Inc. (NYSE:SPGI), 3M Company (NYSE:MMM), Airbnb, Inc. (NASDAQ:ABNB), Stryker Corporation (NYSE:SYK), Atlassian Corporation Plc (NASDAQ:TEAM), Booking Holdings Inc. (NASDAQ:BKNG), and GlaxoSmithKline plc (NYSE:GSK). All of these stocks’ market caps are similar to DE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPGI | 78 | 7036868 | 7 |
| MMM | 46 | 1624838 | 4 |
| ABNB | 58 | 2712558 | 0 |
| SYK | 46 | 3364535 | -2 |
| TEAM | 60 | 6079499 | -4 |
| BKNG | 96 | 8429836 | -4 |
| GSK | 31 | 1658987 | 3 |
| Average | 59.3 | 4415303 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59.3 hedge funds with bullish positions and the average amount invested in these stocks was $4415 million. That figure was $2531 million in DE’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand GlaxoSmithKline plc (NYSE:GSK) is the least popular one with only 31 bullish hedge fund positions. Deere & Company (NYSE:DE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DE is 54.7. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately DE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DE investors were disappointed as the stock returned 3.1% since the end of September (through 11/30) 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.
Follow Deere & Co (NYSE:DE)
Follow Deere & Co (NYSE:DE)
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Disclosure: None. This article was originally published at Insider Monkey.
