In this article we will check out the progression of hedge fund sentiment towards Bunge Limited (NYSE:BG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is BG a good stock to buy now? The best stock pickers were becoming more confident. The number of long hedge fund positions advanced by 4 lately. Bunge Limited (NYSE:BG) was in 41 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that BG isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Louis Bacon Moore of Moore Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a gander at the key hedge fund action surrounding Bunge Limited (NYSE:BG).
Do Hedge Funds Think BG Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in BG over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Moore Global Investments was the largest shareholder of Bunge Limited (NYSE:BG), with a stake worth $133.3 million reported as of the end of September. Trailing Moore Global Investments was Adage Capital Management, which amassed a stake valued at $132.5 million. Millennium Management, Greenhaven Associates, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kehrs Ridge Capital allocated the biggest weight to Bunge Limited (NYSE:BG), around 4.45% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, earmarking 4.28 percent of its 13F equity portfolio to BG.
Consequently, key hedge funds were leading the bulls’ herd. Kehrs Ridge Capital, managed by Brian Scudieri, assembled the biggest position in Bunge Limited (NYSE:BG). Kehrs Ridge Capital had $21.8 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $8.4 million investment in the stock during the quarter. The following funds were also among the new BG investors: Mark Broach’s Manatuck Hill Partners, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Charles Davidson and Joseph Jacobs’s Wexford Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Bunge Limited (NYSE:BG) but similarly valued. We will take a look at Autoliv Inc. (NYSE:ALV), The Gap Inc. (NYSE:GPS), SolarWinds Corporation (NYSE:SWI), Gentex Corporation (NASDAQ:GNTX), Gerdau SA (NYSE:GGB), Commerce Bancshares, Inc. (NASDAQ:CBSH), and Perrigo Co Plc (NASDAQ:PRGO). This group of stocks’ market caps resemble BG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALV | 19 | 629708 | -3 |
| GPS | 35 | 634886 | -3 |
| SWI | 15 | 2718441 | -4 |
| GNTX | 40 | 603326 | 2 |
| GGB | 11 | 134303 | 1 |
| CBSH | 15 | 50769 | -1 |
| PRGO | 29 | 370821 | -4 |
| Average | 23.4 | 734608 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $735 million. That figure was $701 million in BG’s case. Gentex Corporation (NASDAQ:GNTX) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Bunge Limited (NYSE:BG) is more popular among hedge funds. Our overall hedge fund sentiment score for BG is 87. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on BG as the stock returned 40.7% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
