Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Mosaic Company (NYSE:MOS).
Is MOS a good stock to buy? The Mosaic Company (NYSE:MOS) investors should be aware of a decrease in support from the world's most elite money managers of late. The Mosaic Company (NYSE:MOS) was in 38 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 39. There were 39 hedge funds in our database with MOS positions at the end of the fourth quarter. Our calculations also showed that MOS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Kerr Neilson of Platinum Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's analyze the latest hedge fund action encompassing The Mosaic Company (NYSE:MOS).
Do Hedge Funds Think MOS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MOS over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in The Mosaic Company (NYSE:MOS) was held by Slate Path Capital, which reported holding $164.8 million worth of stock at the end of December. It was followed by Adage Capital Management with a $112.2 million position. Other investors bullish on the company included Platinum Asset Management, AQR Capital Management, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Slate Path Capital allocated the biggest weight to The Mosaic Company (NYSE:MOS), around 10.69% of its 13F portfolio. Brightline Capital is also relatively very bullish on the stock, designating 8.74 percent of its 13F equity portfolio to MOS.
Due to the fact that The Mosaic Company (NYSE:MOS) has witnessed falling interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds who sold off their positions entirely last quarter. Interestingly, Renaissance Technologies said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, worth close to $54.6 million in stock, and Ken Heebner's Capital Growth Management was right behind this move, as the fund dropped about $8.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds last quarter.
Let's check out hedge fund activity in other stocks – not necessarily in the same industry as The Mosaic Company (NYSE:MOS) but similarly valued. We will take a look at Bill.com Holdings, Inc. (NYSE:BILL), Lincoln National Corporation (NYSE:LNC), RPM International Inc. (NYSE:RPM), Banco de Chile (NYSE:BCH), Sibanye Stillwater Limited (NYSE:SBSW), Host Hotels and Resorts Inc (NASDAQ:HST), and Fidelity National Financial Inc (NYSE:FNF). All of these stocks' market caps are closest to MOS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BILL,51,2411036,-1 LNC,36,715298,0 RPM,20,79868,-5 BCH,5,53333,2 SBSW,16,272595,-1 HST,25,240687,3 FNF,39,1164238,-1 Average,27.4,705294,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $705 million. That figure was $945 million in MOS's case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 5 bullish hedge fund positions. The Mosaic Company (NYSE:MOS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOS is 69.1. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately MOS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MOS were disappointed as the stock returned -1.1% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.