World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is The Mosaic Company (NYSE:MOS) a buy, sell, or hold? Hedge funds are taking a bearish view. The number of long hedge fund bets were cut by 1 recently. Our calculations also showed that MOS isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the latest hedge fund action surrounding The Mosaic Company (NYSE:MOS).
How are hedge funds trading The Mosaic Company (NYSE:MOS)?
At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in MOS over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of The Mosaic Company (NYSE:MOS), with a stake worth $302.4 million reported as of the end of March. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $246.6 million. D E Shaw, Slate Path Capital, and East Side Capital (RR Partners) were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that The Mosaic Company (NYSE:MOS) has witnessed a decline in interest from the smart money, we can see that there were a few fund managers who were dropping their entire stakes last quarter. It’s worth mentioning that John Horseman’s Horseman Capital Management cut the largest investment of the 750 funds monitored by Insider Monkey, worth close to $24.5 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund dumped about $21.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Mosaic Company (NYSE:MOS) but similarly valued. We will take a look at DaVita Inc (NYSE:DVA), NRG Energy Inc (NYSE:NRG), RingCentral Inc (NYSE:RNG), and UGI Corp (NYSE:UGI). This group of stocks’ market valuations are closest to MOS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVA | 36 | 3435086 | 0 |
| NRG | 42 | 1548220 | 2 |
| RNG | 45 | 1321409 | 2 |
| UGI | 20 | 457311 | 0 |
| Average | 35.75 | 1690507 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.75 hedge funds with bullish positions and the average amount invested in these stocks was $1691 million. That figure was $974 million in MOS’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 20 bullish hedge fund positions. The Mosaic Company (NYSE:MOS) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MOS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MOS investors were disappointed as the stock returned -17.9% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
