The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider The Hershey Company (NYSE:HSY) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
The Hershey Company (NYSE:HSY) has experienced a decrease in hedge fund sentiment in recent months. The Hershey Company (NYSE:HSY) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. There were 38 hedge funds in our database with HSY holdings at the end of June. Our calculations also showed that HSY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ray Dalio of Bridgewater Associates
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. Keeping this in mind let’s take a glance at the recent hedge fund action regarding The Hershey Company (NYSE:HSY).
Do Hedge Funds Think HSY Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HSY over the last 25 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in The Hershey Company (NYSE:HSY) was held by Renaissance Technologies, which reported holding $552.6 million worth of stock at the end of September. It was followed by AQR Capital Management with a $150.1 million position. Other investors bullish on the company included Holocene Advisors, Arrowstreet Capital, and Bridgewater Associates. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to The Hershey Company (NYSE:HSY), around 0.72% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to HSY.
Seeing as The Hershey Company (NYSE:HSY) has faced declining sentiment from hedge fund managers, logic holds that there were a few hedgies that decided to sell off their positions entirely last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, worth close to $25.6 million in call options, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $17.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to The Hershey Company (NYSE:HSY). We will take a look at NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), TransDigm Group Incorporated (NYSE:TDG), Rockwell Automation Inc. (NYSE:ROK), First Republic Bank (NYSE:FRC), International Flavors & Fragrances Inc (NYSE:IFF), and CoStar Group Inc (NASDAQ:CSGP). This group of stocks’ market valuations are closest to HSY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NWG | 7 | 8068 | 2 |
| WELL | 22 | 508861 | 3 |
| TDG | 63 | 7188554 | 6 |
| ROK | 29 | 519693 | 4 |
| FRC | 35 | 918312 | 1 |
| IFF | 46 | 2838241 | -6 |
| CSGP | 29 | 2585035 | -20 |
| Average | 33 | 2080966 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $2081 million. That figure was $1274 million in HSY’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 bullish hedge fund positions. The Hershey Company (NYSE:HSY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HSY is 46.2. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately HSY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HSY investors were disappointed as the stock returned 5.4% since the end of September (through 11/30) 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 in 2021.
Follow Hershey Co (NYSE:HSY)
Follow Hershey Co (NYSE:HSY)
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Disclosure: None. This article was originally published at Insider Monkey.
