Were Hedge Funds Right About Bunge Limited (BG)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Bunge Limited (NYSE:BG).

Is Bunge Limited (NYSE:BG) the right pick for your portfolio? Money managers were in a bearish mood. The number of bullish hedge fund positions retreated by 2 recently. Bunge Limited (NYSE:BG) was in 37 hedge funds’ portfolios at the end of June. The all time high for this statistics is 44. Our calculations also showed that BG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 39 hedge funds in our database with BG positions at the end of the first quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Our analysis determined that presidential election polls were wrong heading into the 2020 election and we were able to make the most accurate predictions in the country after making adjustments for the biases in existing polls. For example we predicted comfortable Trump victories in Florida, North Carolina, Texas, Iowa, and Ohio. We also predicted a very narrow Biden victory of 0.4 points in Wisconsin when most pollsters were predicting 8 to 10 points Biden victories. We are waiting for the results of 5 more states, but our accuracy rate so far is 100% (see our predictions). You can subscribe to our free daily newsletter on our website to get email alerts whenever we publish an interesting article. Now we’re going to go over the recent hedge fund action regarding Bunge Limited (NYSE:BG).

How have hedgies been trading Bunge Limited (NYSE:BG)?

At the end of the second quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in BG a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Bunge Limited (NYSE:BG) was held by Adage Capital Management, which reported holding $125.2 million worth of stock at the end of June. It was followed by Moore Global Investments with a $117.7 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Greenhaven Associates. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to Bunge Limited (NYSE:BG), around 4.13% of its 13F portfolio. Moore Global Investments is also relatively very bullish on the stock, dishing out 3.16 percent of its 13F equity portfolio to BG.

Since Bunge Limited (NYSE:BG) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few money managers that decided to sell off their positions entirely heading into Q3. It’s worth mentioning that Jack Woodruff’s Candlestick Capital Management cut the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $29.9 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund sold off about $9 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Bunge Limited (NYSE:BG). These stocks are Aluminum Corp. of China Limited (NYSE:ACH), Store Capital Corporation (NYSE:STOR), Schrodinger, Inc. (NASDAQ:SDGR), Healthcare Trust Of America Inc (NYSE:HTA), Sibanye Stillwater Limited (NYSE:SBSW), Cenovus Energy Inc (NYSE:CVE), and Signature Bank (NASDAQ:SBNY). This group of stocks’ market values resemble BG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACH 6 3451 4
STOR 16 689832 -9
SDGR 15 1099632 0
HTA 16 163019 0
SBSW 17 115611 -2
CVE 26 314936 2
SBNY 24 305465 5
Average 17.1 384564 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $620 million in BG’s case. Cenovus Energy Inc (NYSE:CVE) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 6 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 78.2. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 23% in 2020 through October 30th but still managed to beat the market by 20.1 percentage points. Hedge funds were also right about betting on BG as the stock returned 39.4% since the end of June (through 10/30) 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.