Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Deere & Company (NYSE:DE) has seen an increase in enthusiasm from smart money lately. DE was in 35 hedge funds’ portfolios at the end of the third quarter of 2015. There were 31 hedge funds in our database with DE positions at the end of the previous quarter. At the end of this article we will also compare DE to other stocks including TE Connectivity Ltd. (NYSE:TEL), Eaton Corporation, PLC Ordinary Shares (NYSE:ETN), and Sempra Energy (NYSE:SRE) to get a better sense of its popularity.
Follow Deere & Co (NYSE:DE)
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With all of this in mind, we’re going to take a look at the latest action regarding Deere & Company (NYSE:DE).
How are hedge funds trading Deere & Company (NYSE:DE)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the number one position in Deere & Company (NYSE:DE), worth close to $1.2619 billion, accounting for 1% of its total 13F portfolio. On Berkshire Hathaway’s heels is David Blood and Al Gore of Generation Investment Management, with a $343.6 million position; 5% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Bob Peck and Andy Raab’s FPR Partners, Tom Gayner’s Markel Gayner Asset Management and Mario Gabelli’s GAMCO Investors.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Firefly Value Partners, managed by Ryan Heslop and Ariel Warszawski, assembled the biggest position in Deere & Company (NYSE:DE). Firefly Value Partners had $26.6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $21.5 million investment in the stock during the quarter. The following funds were also among the new DE investors: Benjamin A. Smith’s Laurion Capital Management, Paul Orlin and Alex Porter’s Amici Capital, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to Deere & Company (NYSE:DE). These stocks are TE Connectivity Ltd. (NYSE:TEL), Eaton Corporation, PLC Ordinary Shares (NYSE:ETN), Sempra Energy (NYSE:SRE), and PPG Industries, Inc. (NYSE:PPG). This group of stocks’ market values resemble DE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEL | 28 | 1265394 | -10 |
| ETN | 41 | 985054 | -5 |
| SRE | 28 | 968933 | -5 |
| PPG | 51 | 1624847 | 5 |
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1,211 million. That figure was $2,637 million in DE’s case. PPG Industries, Inc. (NYSE:PPG) is the most popular stock in this table. On the other hand TE Connectivity Ltd. (NYSE:TEL) is the least popular one with only 28 bullish hedge fund positions. Deere & Company (NYSE:DE) 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 PPG might be a better candidate to consider a long position.
