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Hedge Funds Are Warming Up To CNH Industrial NV (CNHI)

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 CNH Industrial NV (NYSE:CNHI).

CNH Industrial NV (NYSE:CNHI) has experienced an increase in hedge fund interest lately. Our calculations also showed that CNHI 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).

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.

Mason Hawkins of Southeastern Asset Management

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. Keeping this in mind let’s go over the fresh hedge fund action regarding CNH Industrial NV (NYSE:CNHI).

What does smart money think about CNH Industrial NV (NYSE:CNHI)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CNHI over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Is CNHI A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in CNH Industrial NV (NYSE:CNHI), worth close to $61.2 million, amounting to 0.7% of its total 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $52.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish consist of Mason Hawkins’s Southeastern Asset Management, Renaissance Technologies and Paul Singer’s Elliott Investment Management. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to CNH Industrial NV (NYSE:CNHI), around 0.72% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, earmarking 0.65 percent of its 13F equity portfolio to CNHI.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Renaissance Technologies, created the most valuable position in CNH Industrial NV (NYSE:CNHI). Renaissance Technologies had $5.8 million invested in the company at the end of the quarter. Paul Singer’s Elliott Investment Management also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Greg Eisner’s Engineers Gate Manager, and Minhua Zhang’s Weld Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CNH Industrial NV (NYSE:CNHI) but similarly valued. These stocks are Carlyle Group LP (NASDAQ:CG), Zillow Group Inc (NASDAQ:Z), Clarivate Analytics Plc (NYSE:CCC), and The Western Union Company (NYSE:WU). This group of stocks’ market caps resemble CNHI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CG 16 232286 3
Z 37 1368913 0
CCC 28 818151 -17
WU 34 339513 5
Average 28.75 689716 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $690 million. That figure was $157 million in CNHI’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 16 bullish hedge fund positions. CNH Industrial NV (NYSE:CNHI) is not the least popular stock in this group but hedge fund interest is still below average. 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 still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on CNHI as the stock returned 30.7% during the second quarter and outperformed the market by an even larger margin.

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