Is Freshpet Inc (NASDAQ:FRPT) 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 Freshpet Inc (NASDAQ:FRPT) a bargain? Investors who are in the know were turning less bullish. The number of long hedge fund bets fell by 4 lately. Freshpet Inc (NASDAQ:FRPT) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that FRPT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Paul Marshall of Marshall Wace
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. Now let’s review the key hedge fund action regarding Freshpet Inc (NASDAQ:FRPT).
Do Hedge Funds Think FRPT Is A Good Stock To Buy Now?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in FRPT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Freshpet Inc (NASDAQ:FRPT) was held by Rock Springs Capital Management, which reported holding $75.2 million worth of stock at the end of September. It was followed by Millennium Management with a $62.5 million position. Other investors bullish on the company included Fisher Asset Management, Marshall Wace LLP, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Freshpet Inc (NASDAQ:FRPT), around 2.55% of its 13F portfolio. Stony Point Capital is also relatively very bullish on the stock, earmarking 1.7 percent of its 13F equity portfolio to FRPT.
Since Freshpet Inc (NASDAQ:FRPT) has experienced declining sentiment from hedge fund managers, we can see that there were a few funds that slashed their positions entirely by the end of the third quarter. Interestingly, Jinghua Yan’s TwinBeech Capital sold off the largest position of all the hedgies monitored by Insider Monkey, valued at about $1.3 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also sold off its stock, about $1.3 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Freshpet Inc (NASDAQ:FRPT). We will take a look at BOK Financial Corporation (NASDAQ:BOKF), CACI International Inc (NYSE:CACI), InVitae Corporation (NYSE:NVTA), Grupo Televisa SAB (NYSE:TV), Switch, Inc. (NYSE:SWCH), Denali Therapeutics Inc. (NASDAQ:DNLI), and Coherent, Inc. (NASDAQ:COHR). All of these stocks’ market caps resemble FRPT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOKF | 15 | 376008 | 2 |
| CACI | 20 | 394960 | -6 |
| NVTA | 24 | 1807422 | -7 |
| TV | 16 | 843545 | -1 |
| SWCH | 17 | 229494 | 1 |
| DNLI | 23 | 179874 | 1 |
| COHR | 37 | 1464037 | -6 |
| Average | 21.7 | 756477 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $756 million. That figure was $348 million in FRPT’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 15 bullish hedge fund positions. Freshpet Inc (NASDAQ:FRPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FRPT is 47.2. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately FRPT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FRPT were disappointed as the stock returned -27.2% since the end of September (through 12/9) 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.
