Was The Smart Money Right About S&P Global Inc. (SPGI)?

In this article we will take a look at whether hedge funds think S&P Global Inc. (NYSE:SPGI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

S&P Global Inc. (NYSE:SPGI) investors should be aware of an increase in enthusiasm from smart money lately. S&P Global Inc. (NYSE:SPGI) was in 71 hedge funds’ portfolios at the end of June. The all time high for this statistic is 76. There were 66 hedge funds in our database with SPGI holdings at the end of March. Our calculations also showed that SPGI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Altman Owl Creek

Jeffrey Altman of Owl Creek Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV 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. With all of this in mind we’re going to review the key hedge fund action surrounding S&P Global Inc. (NYSE:SPGI).

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

At the end of June, a total of 71 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SPGI over the last 24 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is SPGI A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Chris Hohn’s TCI Fund Management has the most valuable position in S&P Global Inc. (NYSE:SPGI), worth close to $2.4026 billion, accounting for 6% of its total 13F portfolio. Coming in second is Cantillon Capital Management, led by William von Mueffling, holding a $971.6 million position; the fund has 6.5% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Dev Kantesaria’s Valley Forge Capital, Dan Loeb’s Third Point and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Rings Capital Management allocated the biggest weight to S&P Global Inc. (NYSE:SPGI), around 43.42% of its 13F portfolio. Valley Forge Capital is also relatively very bullish on the stock, earmarking 20.29 percent of its 13F equity portfolio to SPGI.

As aggregate interest increased, specific money managers have jumped into S&P Global Inc. (NYSE:SPGI) headfirst. Holocene Advisors, managed by Brandon Haley, created the most outsized call position in S&P Global Inc. (NYSE:SPGI). Holocene Advisors had $57.3 million invested in the company at the end of the quarter. Peter Seuss’s Prana Capital Management also made a $43.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Leon Shaulov’s Maplelane Capital, and Israel Englander’s Millennium Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as S&P Global Inc. (NYSE:SPGI) but similarly valued. We will take a look at Stryker Corporation (NYSE:SYK), Micron Technology, Inc. (NASDAQ:MU), Moderna, Inc. (NASDAQ:MRNA), Uber Technologies, Inc. (NYSE:UBER), Anthem Inc (NYSE:ANTM), Lam Research Corporation (NASDAQ:LRCX), and Airbnb, Inc. (NASDAQ:ABNB). This group of stocks’ market caps are closest to SPGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SYK 48 3369193 2
MU 87 6333058 -13
MRNA 37 5754554 -2
UBER 135 10412577 5
ANTM 67 4838358 9
LRCX 58 3719258 4
ABNB 58 2711062 6
Average 70 5305437 1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 70 hedge funds with bullish positions and the average amount invested in these stocks was $5305 million. That figure was $7278 million in SPGI’s case. Uber Technologies, Inc. (NYSE:UBER) is the most popular stock in this table. On the other hand Moderna, Inc. (NASDAQ:MRNA) is the least popular one with only 37 bullish hedge fund positions. S&P Global Inc. (NYSE:SPGI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SPGI is 55.4. 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 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on SPGI as the stock returned 15.7% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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