Is CNI Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Canadian National Railway Company (NYSE:CNI).

Is CNI stock a buy? Canadian National Railway Company (NYSE:CNI) has seen an increase in hedge fund sentiment in recent months. Canadian National Railway Company (NYSE:CNI) was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CNI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Keeping this in mind we’re going to review the key hedge fund action regarding Canadian National Railway Company (NYSE:CNI).

Do Hedge Funds Think CNI Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in CNI over the last 22 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Among these funds, Bill & Melinda Gates Foundation Trust held the most valuable stake in Canadian National Railway Company (NYSE:CNI), which was worth $1865.2 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $96.2 million worth of shares. Millennium Management, Renaissance Technologies, and Balyasny Asset Management 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 Bill & Melinda Gates Foundation Trust allocated the biggest weight to Canadian National Railway Company (NYSE:CNI), around 8.35% of its 13F portfolio. Heronetta Management is also relatively very bullish on the stock, dishing out 5.6 percent of its 13F equity portfolio to CNI.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Canadian National Railway Company (NYSE:CNI). Balyasny Asset Management had $28.9 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Byington’s Appian Way Asset Management, Mika Toikka’s AlphaCrest Capital Management, and Parvinder Thiara’s Athanor Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Canadian National Railway Company (NYSE:CNI) but similarly valued. We will take a look at Altria Group Inc (NYSE:MO), Fiserv, Inc. (NASDAQ:FISV), NIO Inc. (NYSE:NIO), Automatic Data Processing (NASDAQ:ADP), Cigna Corporation (NYSE:CI), Snap Inc. (NYSE:SNAP), and Baidu, Inc. (NASDAQ:BIDU). This group of stocks’ market values are closest to CNI’s market value.

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As you can see these stocks had an average of 54.9 hedge funds with bullish positions and the average amount invested in these stocks was $3398 million. That figure was $2189 million in CNI’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Canadian National Railway Company (NYSE:CNI) is even less popular than NIO. Our overall hedge fund sentiment score for CNI is 40. 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. Hedge funds dodged a bullet by taking a bearish stance towards CNI. Our calculations showed that the top 20 most popular hedge fund stocks returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th but managed to beat the market again by 1.5 percentage points. Unfortunately CNI wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was very bearish); CNI investors were disappointed as the stock returned 6.5% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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