Do Hedge Funds Love SYSCO Corporation (SYY)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like SYSCO Corporation (NYSE:SYY).

Is SYSCO Corporation (NYSE:SYY) the right investment to pursue these days? Money managers are betting on the stock. The number of bullish hedge fund positions increased by 1 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Health Care REIT, Inc. (NYSE:HCN), Norfolk Southern Corp. (NYSE:NSC), and Perrigo Company (NYSE:PRGO) to gather more data points.

In the financial world, there are several metrics market participants use to evaluate publicly traded companies. Two of the most innovative metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform their index-focused peers by a healthy amount (see the details here).

Now, we’re going to take a look at the latest action encompassing SYSCO Corporation (NYSE:SYY).

Hedge fund activity in SYSCO Corporation (NYSE:SYY)

Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 3% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Trian Partners, managed by Nelson Peltz, holds the number one position in SYSCO Corporation (NYSE:SYY). Trian Partners has a $1.61 billion position in the stock, comprising 13.8% of its 13F portfolio. On Trian Partners’ heels is Donald Yacktman of Yacktman Asset Management, with a $1.01 billion position; the fund has 6.6% of its 13F portfolio invested in the stock. Other peers that are bullish include Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management, and Cliff Asness’ AQR Capital Management.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Renaissance Technologies created the most valuable position in SYSCO Corporation (NYSE:SYY). Renaissance Technologies had $136 million invested in the company at the end of the quarter. Balyasny Asset Management also made a $67.6 million investment in the stock during the quarter. The following funds were also among the new SYY investors: Gordy Holterman and Derek Dunn’s Overland Advisors, John Tompkins’s Tyvor Capital, and Peter Muller’s PDT Partners.

Let’s now review hedge fund activity in other stocks similar to SYSCO Corporation (NYSE:SYY). These stocks are Health Care REIT, Inc. (NYSE:HCN), Norfolk Southern Corp. (NYSE:NSC), Perrigo Company (NYSE:PRGO), and General Growth Properties Inc (NYSE:GGP). All of these stocks’ market caps are closest to SYSCO Corporation (NYSE:SYY)’s market cap.

As you can see, these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1.49 billion. That figure was $3.46 billion in SYSCO Corporation (NYSE:SYY)’s case. Perrigo Company (NASDAQ:PRGO) is the most popular stock in this table. On the other hand, Health Care REIT, Inc. (NYSE:HCN) is the least popular one with only 24 bullish hedge fund positions. SYSCO Corporation (NYSE:SYY) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Perrigo Company (NASDAQ:PRGO) might be a better candidate to consider a long position.