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Here is What Hedge Funds Think About CNH Industrial NV (CNHI)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about CNH Industrial NV (NYSE:CNHI) in this article.

Hedge fund interest in CNH Industrial NV (NYSE:CNHI) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Grifols SA (NASDAQ:GRFS), Concho Resources Inc. (NYSE:CXO), and Enel Americas S.A. (NYSE:ENIA) to gather more data points. Our calculations also showed that CNHI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mario Gabelli

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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the fresh hedge fund action surrounding CNH Industrial NV (NYSE:CNHI).

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

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CNHI over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CNHI A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the biggest position in CNH Industrial NV (NYSE:CNHI), worth close to $114.5 million, accounting for 1% of its total 13F portfolio. On GAMCO Investors’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $106.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers with similar optimism include Mason Hawkins’s Southeastern Asset Management, Israel Englander’s Millennium Management and Mitch Kuflik and Rob Sobel’s Brahman Capital. In terms of the portfolio weights assigned to each position Brahman Capital allocated the biggest weight to CNH Industrial NV (NYSE:CNHI), around 1.45% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, setting aside 1.19 percent of its 13F equity portfolio to CNHI.

Judging by the fact that CNH Industrial NV (NYSE:CNHI) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedgies who sold off their positions entirely last quarter. It’s worth mentioning that Renaissance Technologies cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $4.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $0.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CNH Industrial NV (NYSE:CNHI) but similarly valued. We will take a look at Grifols SA (NASDAQ:GRFS), Concho Resources Inc. (NYSE:CXO), Enel Americas S.A. (NYSE:ENIA), and Skyworks Solutions Inc (NASDAQ:SWKS). All of these stocks’ market caps are closest to CNHI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRFS 19 361224 3
CXO 28 387562 1
ENIA 8 180580 -3
SWKS 24 690929 -7
Average 19.75 405074 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $405 million. That figure was $342 million in CNHI’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 8 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. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CNHI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CNHI investors were disappointed as the stock returned 5.9% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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