Hedge Funds Are Selling Flowers Foods, Inc. (FLO)

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Flowers Foods, Inc. (NYSE:FLO).

Flowers Foods, Inc. (NYSE:FLO) investors should pay attention to a decrease in hedge fund interest of late. Flowers Foods, Inc. (NYSE:FLO) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that FLO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the 21st century investor’s toolkit there are tons of signals stock market investors use to assess their stock investments. Some of the best signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding Flowers Foods, Inc. (NYSE:FLO).

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

At first quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the fourth quarter of 2020. By comparison, 27 hedge funds held shares or bullish call options in FLO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Flowers Foods, Inc. (NYSE:FLO), with a stake worth $115.5 million reported as of the end of March. Trailing Renaissance Technologies was Diamond Hill Capital, which amassed a stake valued at $67.6 million. AQR Capital Management, GAMCO Investors, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Flowers Foods, Inc. (NYSE:FLO), around 0.4% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, dishing out 0.27 percent of its 13F equity portfolio to FLO.

Because Flowers Foods, Inc. (NYSE:FLO) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of funds that decided to sell off their positions entirely last quarter. Intriguingly, David Harding’s Winton Capital Management dumped the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $1.1 million in stock, and Murray Stahl’s Horizon Asset Management was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Flowers Foods, Inc. (NYSE:FLO). We will take a look at MSC Industrial Direct Co Inc (NYSE:MSM), Macy’s, Inc. (NYSE:M), Grand Canyon Education Inc (NASDAQ:LOPE), Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS), Grupo Televisa SAB (NYSE:TV), and Beam Therapeutics Inc. (NASDAQ:BEAM). All of these stocks’ market caps are similar to FLO’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $508 million. That figure was $302 million in FLO’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS) is the least popular one with only 10 bullish hedge fund positions. Flowers Foods, Inc. (NYSE:FLO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLO is 67.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately FLO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FLO were disappointed as the stock returned 1.8% since the end of March (through 7/9) 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 many of these stocks already outperformed the market since 2019.

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