5 Best Food Stocks to Buy Now

It is commonly known that population growth is one of the key drivers of both current and future demand for food. According to a recent study conducted by the Food and Agriculture Organization (FAO), food demand is expected to increase by 60% over the projection period of 2006-2050, primarily propelled by the population growth. Likewise, developing countries are estimated to experience a surge in food demand of 77% over the same time span. Aside from the population growth, the rising disposable income, altering age composition, and changing diet preferences are other important drivers of food demand. Having said that, the food industry appears to keep under wraps numerous attractive investment opportunities at the moment, keeping in mind the recent pullback in the majority of U.S. securities. In the following article we will present a list of five food stocks favored by the hedge fund industry, each one of which could potentially represent great buying opportunities.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 118% since then and outperformed the S&P 500 Index by around61 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

5. Bunge Ltd (NYSE:BG)

Investors with Long Positions (as of June 30): 33

Aggregate Value of Investors’ Holdings (as of June 30): $1.02 Billion

The number of hedge funds monitored by Insider Monkey with long positions in Bunge Ltd (NYSE:BG) was down by one during the second quarter, with these positions amassing 8.10% of the company’s outstanding shares as of June 30. Similarly, their aggregate value declined by $200.16 million or by over 16% during this period. The shares of Bunge have lost nearly 22% year-to-date, mainly owning to their downfall since end-June, when the company reported its second-quarter financial results. Some executive’s moves may suggest that the stock has been beaten down too strongly by the market. For instance, Brian Thomsen, Managing Director, Bunge Global Agribusiness and CEO, Bunge Product Lines, reported acquiring 14,000 shares in August at a weighted average price of $69.44, boosting his stake to 27,241 shares. Relational Investors disclosed an ownership stake of 4.95 million shares in its most recent 13F filing.

4. SUPERVALU Inc. (NYSE:SVU)

Investors with Long Positions (as of June 30): 38

Aggregate Value of Investors’ Holdings (as of June 30): $394.25 Million

Two more hedge fund investors owned stakes in SUPERVALU Inc. (NYSE:SVU) at the end of the latest quarter compared to the prior one, while in aggregate they amassed 18.40% of the company’s outstanding stock. Nevertheless, the value of these stakes shrank by $185.74 million during the three-month period. Supervalu has had a rough year so far, with its shares losing more than 21% since the beginning of the year. Even so, the company has been successful in reducing costs, strengthening its balance sheet, changing management, and also jettisoning its Albertsons stores acquired back in 2006, a deal that seriously affected its balance sheet. Moreover, the company is considering spinning-off its deep-discount supermarket chain, Save-A-Lot, which could eventually unlock significant value for shareholders. Conan Laughlin’s North Tide Capital represents the largest shareholder of SUPERVALU Inc. (NYSE:SVU) within our database, holding 12.5 million shares.

3. GNC Holdings Inc. (NYSE:GNC)

Investors with Long Positions (as of June 30): 40

Aggregate Value of Investors’ Holdings (as of June 30): $1.04 Billion

GNC Holdings Inc. (NYSE:GNC) received quite some attention from the hedge fund industry during the second quarter, as the number of top money managers invested in the stock was up by 12 quarter-over-quarter, stockpiling 27% of the company’s shares. The value of their investments climbed $51.90 million over this period. A little more than a month ago, GNC revealed its updated share repurchasing program, under which the company is set to repurchase up to $500 million of its Class A common stock. This might theoretically point to the fact the GNC’s stock is trading at undervalued levels at the moment after losing almost 5% since the beginning of 2015. Ricky Sandler’s Eminence Capital uplifted its GNC Holdings Inc. (NYSE:GNC) stake by 27% during the last quarter to 5.78 million shares.

2. Mead Johnson Nutrition CO (NYSE:MJN)

Investors with Long Positions (as of June 30): 44

Aggregate Value of Investors’ Holdings (as of June 30): $1.86 Billion

Six more hedge funds had Mead Johnson Nutrition CO (NYSE:MJN) in their latest 13F filings compared to the previous quarter. At the same time, 10.20% of the company’s outstanding common stock was owned by the hedge funds tracked by Insider Monkey at the end of the June quarter, while the value of their holdings in the stock increased by $743.62 million. Just recently, Credit Suisse has reduced the price target on MJN’s stock to $88 from $102, citing worries about MJN’s position on the Chinese market, substantial discounting programs, and negative effects of currency exchange rates. Even so, the company has seen heavy insider buying activity as of late, which could suggest that the stock (which lost nearly 29% year-to-date) is trading at attractive levels. For instance, director James M. Cornelius added 10,000 shares at $77.1 per unit to his holding that currently comprises 23,837 shares. James Dinan’s York Capital Management owns 2.7 million shares of Mead Johnson Nutrition CO (NYSE:MJN) as of June 30.

1. Mondelez International Inc. (NASDAQ:MDLZ)

Investors with Long Positions (as of June 30): 49

Aggregate Value of Investors’ Holdings (as of June 30): $4.81 Billion

Mondelez International Inc. (NASDAQ:MDLZ) lost its some appeal among the hedge funds tracked by us, with 49 investors having positions in the stock at the end of the second quarter, compared to 65 registered in the previous quarter. Similarly, the value of the overall stakes in the stock declined by $1.31 billion during the recent reporting period. Therefore, their stakes accounted for 7.20% of Mondelez’s shares at the end of June. Even though the shares of Mondelez have advanced more than 17% since the beginning of the year, it appears that there is more room to run for the stock. The company has been heavily focused on reducing costs lately, and anticipates its cost cutting efforts to generate $1.5 billion in savings by 2018 and enhance operating margins to 15%-16% next year. Bill Ackman’s Pershing Square, which acquired 120.27 million shares of Mondelez International Inc. (NASDAQ:MDLZ) in August, believes that the company has great potential in the future (read article).

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