Hedge Funds Are Coming Back To Tyson Foods, Inc. (TSN)

Is Tyson Foods, Inc. (NYSE:TSN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Tyson Foods, Inc. (NYSE:TSN) the right investment to pursue these days? Hedge funds were taking an optimistic view. The number of long hedge fund bets went up by 5 recently. Tyson Foods, Inc. (NYSE:TSN) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistic is 58. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Yacktman of Yacktman 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 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. Now let’s take a peek at the recent hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).

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

At Q2’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the first quarter of 2020. By comparison, 37 hedge funds held shares or bullish call options in TSN a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Donald Yacktman’s Yacktman Asset Management has the number one position in Tyson Foods, Inc. (NYSE:TSN), worth close to $201.2 million, comprising 2% of its total 13F portfolio. On Yacktman Asset Management’s heels is AQR Capital Management, led by Cliff Asness, holding a $150.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Noam Gottesman’s GLG Partners, Bernard Horn’s Polaris Capital Management and Ray Dalio’s Bridgewater Associates. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 1.95% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 1.77 percent of its 13F equity portfolio to TSN.

As aggregate interest increased, specific money managers have been driving this bullishness. Candlestick Capital Management, managed by Jack Woodruff, initiated the most outsized position in Tyson Foods, Inc. (NYSE:TSN). Candlestick Capital Management had $20.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.5 million position during the quarter. The other funds with brand new TSN positions are Andrew Weiss’s Weiss Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Matthew Tewksbury’s Stevens Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tyson Foods, Inc. (NYSE:TSN) but similarly valued. We will take a look at Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), Rogers Communications Inc. (NYSE:RCI), Sirius XM Holdings Inc (NASDAQ:SIRI), Genmab A/S (NASDAQ:GMAB), Ball Corporation (NYSE:BLL), and West Pharmaceutical Services Inc. (NYSE:WST). This group of stocks’ market valuations match TSN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $744 million in TSN’s case. Ball Corporation (NYSE:BLL) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 9 bullish hedge fund positions. Tyson Foods, Inc. (NYSE:TSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TSN is 61.4. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on TSN as the stock returned 8.6% since the end of Q2 (through 10/15) 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.