Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Post Holdings Inc (NYSE:POST).
Post Holdings Inc (NYSE:POST) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that post isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are several indicators investors use to appraise their holdings. Some of the less utilized indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top fund managers can beat the broader indices by a significant margin (see the details here).
Let’s review the fresh hedge fund action encompassing Post Holdings Inc (NYSE:POST).
What does the smart money think about Post Holdings Inc (NYSE:POST)?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards POST over the last 13 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Route One Investment Company was the largest shareholder of Post Holdings Inc (NYSE:POST), with a stake worth $558.3 million reported as of the end of September. Trailing Route One Investment Company was Iridian Asset Management, which amassed a stake valued at $214.3 million. Diamond Hill Capital, Levin Capital Strategies, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in Post Holdings Inc (NYSE:POST). Marshall Wace LLP had $2.4 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new POST investors: Richard Driehaus’s Driehaus Capital, Joel Greenblatt’s Gotham Asset Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Post Holdings Inc (NYSE:POST) but similarly valued. These stocks are Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), Oaktree Capital Group LLC (NYSE:OAK), Huntsman Corporation (NYSE:HUN), and Masimo Corporation (NASDAQ:MASI). All of these stocks’ market caps are closest to POST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHI | 6 | 15803 | 2 |
| OAK | 7 | 197717 | -2 |
| HUN | 31 | 824128 | 0 |
| MASI | 28 | 503409 | -1 |
| Average | 18 | 385264 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $1.59 billion in POST’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Co. (NYSE:SHI) is the least popular one with only 6 bullish hedge fund positions. Post Holdings Inc (NYSE:POST) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HUN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
