How Canadian National Railway (USA) (CNI) Stacks Up Against Similarly Valued Stocks

Is Canadian National Railway (USA) (NYSE:CNI) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Is Canadian National Railway (USA) (NYSE:CNI) a healthy stock for your portfolio? Prominent investors are getting less optimistic. The number of bullish hedge fund positions were trimmed by 4 lately. There were 21 hedge funds in our database with CNI positions at the end of the previous quarter. 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 BHP Billiton Limited (ADR) (NYSE:BHP), Honda Motor Co Ltd (ADR) (NYSE:HMC), and, Inc. (ADR) (NASDAQ:BIDU) to gather more data points.

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Keeping this in mind, let’s take a gander at the new action surrounding Canadian National Railway (USA) (NYSE:CNI).

What does the smart money think about Canadian National Railway (USA) (NYSE:CNI)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CNI over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Bill & Melinda Gates Foundation Trust, led by Michael Larson, holds the most valuable position in Canadian National Railway (USA) (NYSE:CNI). Bill & Melinda Gates Foundation Trust has a $1.1201 billion position in the stock, comprising 6.1% of its 13F portfolio. The second most bullish fund manager is Tetrem Capital Management, led by Daniel Bubis, which holds a $83.7 million position; 3.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Ken Fisher’s Fisher Asset Management, Steve Cohen’s Point72 Asset Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Canadian National Railway (USA) (NYSE:CNI) has faced bearish sentiment from hedge fund managers, we can see that there exists a select few hedgies who sold off their positions entirely last quarter. At the top of the heap, Joel Greenblatt’s Gotham Asset Management dumped the biggest stake of all the hedgies followed by Insider Monkey, totaling close to $17.6 million in stock. Todd J. Kantor’s fund, Encompass Capital Advisors, also dumped its stock, about $5.9 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Canadian National Railway (USA) (NYSE:CNI) but similarly valued. These stocks are BHP Billiton Limited (ADR) (NYSE:BHP), Honda Motor Co Ltd (ADR) (NYSE:HMC),, Inc. (ADR) (NASDAQ:BIDU), and Monsanto Company (NYSE:MON). This group of stocks’ market caps resemble CNI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHP 19 253041 2
HMC 11 150009 3
BIDU 57 4125681 1
MON 77 3675899 -10

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $2051 million. That figure was $1448 million in CNI’s case. Monsanto Company (NYSE:MON) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (ADR) (NYSE:HMC) is the least popular one with only 11 bullish hedge fund positions. Canadian National Railway (USA) (NYSE:CNI) 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. In this regard MON might be a better candidate to consider taking a long position in.