Is GIS Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards General Mills, Inc. (NYSE:GIS).

Is GIS stock a buy or sell? The best stock pickers were becoming more confident. The number of long hedge fund positions moved up by 3 in recent months. General Mills, Inc. (NYSE:GIS) was in 39 hedge funds’ portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that GIS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

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 10 best battery stocks to buy 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. With all of this in mind we’re going to take a look at the recent hedge fund action encompassing General Mills, Inc. (NYSE:GIS).

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

At Q4’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2020. On the other hand, there were a total of 37 hedge funds with a bullish position in GIS a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in General Mills, Inc. (NYSE:GIS), which was worth $324.8 million at the end of the fourth quarter. On the second spot was Two Sigma Advisors which amassed $175 million worth of shares. AQR Capital Management, D E Shaw, and Citadel Investment Group 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 Half Sky Capital allocated the biggest weight to General Mills, Inc. (NYSE:GIS), around 14.27% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, dishing out 1.06 percent of its 13F equity portfolio to GIS.

As aggregate interest increased, specific money managers have been driving this bullishness. Paloma Partners, managed by Donald Sussman, initiated the largest position in General Mills, Inc. (NYSE:GIS). Paloma Partners had $4.2 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also made a $3.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Nicholas Bagnall’s Te Ahumairangi Investment Management, Michael Gelband’s ExodusPoint Capital, and Parvinder Thiara’s Athanor Capital.

Let’s now review hedge fund activity in other stocks similar to General Mills, Inc. (NYSE:GIS). We will take a look at Xcel Energy Inc (NYSE:XEL), Travelers Companies Inc (NYSE:TRV), DexCom, Inc. (NASDAQ:DXCM), Aptiv PLC (NYSE:APTV), Parker-Hannifin Corporation (NYSE:PH), Ford Motor Company (NYSE:F), and Trane Technologies plc (NYSE:TT). This group of stocks’ market valuations match GIS’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 41.3 hedge funds with bullish positions and the average amount invested in these stocks was $1138 million. That figure was $953 million in GIS’s case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Xcel Energy Inc (NYSE:XEL) is the least popular one with only 28 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. Our overall hedge fund sentiment score for GIS is 55.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately GIS wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); GIS investors were disappointed as the stock returned 3.1% since the end of December (through 3/19) 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 in 2020.

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

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