The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards General Mills, Inc. (NYSE:GIS).
At the end of September, 33 funds tracked by Insider Monkey held shares of General Mills, Inc. (NYSE:GIS). The company saw an increase in hedge fund sentiment during the third quarter, as there had been 29 hedge funds in our database with GIS holdings at the end of June. 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 McKesson Corporation (NYSE:MCK), Automatic Data Processing (NASDAQ:ADP), and The Bank of New York Mellon Corporation (NYSE:BK) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to take a look at the fresh action regarding General Mills, Inc. (NYSE:GIS).
What have hedge funds been doing with General Mills, Inc. (NYSE:GIS)?
At the end of September, 33 funds tracked by Insider Monkey held long positions in General Mills, up by 14% from the previous quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the largest position in General Mills, Inc. (NYSE:GIS), worth close to $159.5 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Mario Gabelli’s GAMCO Investors, with a $147.2 million position; 1% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.
As industrywide interest jumped, key hedge funds have jumped into General Mills, Inc. (NYSE:GIS) headfirst. Jim Simons’ Renaissance Technologies assembled the most outsized position in General Mills, Inc. (NYSE:GIS). Renaissance Technologies had $117.7 million invested in the company at the end of the quarter. Mark Kingdon’s Kingdon Capital also initiated a $19.2 million position during the quarter. The other funds with brand new GIS positions are George Hall’s Clinton Group, Greg Poole’s Echo Street Capital Management, and Ray Dalio’s Bridgewater Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as General Mills, Inc. (NYSE:GIS) but similarly valued. These stocks are McKesson Corporation (NYSE:MCK), Automatic Data Processing (NASDAQ:ADP), The Bank of New York Mellon Corporation (NYSE:BK), and Kinder Morgan Inc (NYSE:KMI). This group of stocks’ market values are similar to GIS’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 52 funds with bullish positions at the end of September and the average amount invested in these stocks was $2.17 billion, compared to $607 million in GIS’s case. Kinder Morgan Inc (NYSE:KMI) is the most popular stock in this table. On the other hand Automatic Data Processing (NASDAQ:ADP) is the least popular one with only 32 bullish hedge fund positions. General Mills, Inc. (NYSE:GIS) 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, Kinder Morgan Inc (NYSE:KMI) might be a better candidate to consider a long position.