Hedge Funds Are Dumping Kellogg Company (K)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Kellogg Company (NYSE:K), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Kellogg Company (NYSE:K) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. K investors should be aware of a decrease in support from the world’s most elite money managers recently. There were 32 hedge funds in our database with K holdings at the end of June. Our calculations also showed that K isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a glance at the recent hedge fund action encompassing Kellogg Company (NYSE:K).

David Siegel of Two Sigma Advisors

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

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in K over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Kellogg Company (NYSE:K) was held by Renaissance Technologies, which reported holding $100.6 million worth of stock at the end of September. It was followed by Bridgewater Associates with a $42.5 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Factorial Partners allocated the biggest weight to Kellogg Company (NYSE:K), around 2.16% of its 13F portfolio. Bridgewater Associates is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to K.

Seeing as Kellogg Company (NYSE:K) has experienced a decline in interest from the smart money, we can see that there is a sect of fund managers who were dropping their positions entirely in the third quarter. Interestingly, Panayotis Takis Sparaggis’s Alkeon Capital Management said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $128.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund sold off about $113.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 10 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Kellogg Company (NYSE:K). We will take a look at KE Holdings Inc (NYSE:BEKE), Ventas, Inc. (NYSE:VTR), McCormick & Company, Incorporated (NYSE:MKC), DTE Energy Company (NYSE:DTE), FleetCor Technologies, Inc. (NYSE:FLT), Dollar Tree, Inc. (NASDAQ:DLTR), and TransUnion (NYSE:TRU). This group of stocks’ market caps are similar to K’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $1415 million. That figure was $290 million in K’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand DTE Energy Company (NYSE:DTE) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Kellogg Company (NYSE:K) is even less popular than DTE. Our overall hedge fund sentiment score for K is 11.9. 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. Hedge funds dodged a bullet by taking a bearish stance towards K. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 but managed to beat the market again by 3.6 percentage points. Unfortunately K wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); K investors were disappointed as the stock returned 1.7% since the end of the third quarter (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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