As the major indices are in the green on Wednesday, Hormel Foods Corporation (NYSE:HRL) shares have inched down on the news that its Chief Financial Officer, Jody Feragen, will retire on October 30. Taking Feragen’s place will be James Sheehan, who is currently the Chief Accounting Officer. After surging to a high of $44, Hormel Foods shares have retraced and are now down 11.3% year-to-date. Shares trade for a forward P/E of 21.5 and yield a 1.67% dividend. Analysts have a $40.50 consensus price target. Among hedge funds, Hormel Stock is not very popular, although during the first quarter the number of funds with long positions went up.
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Hormel Foods Corporation (NYSE:HRL) in this article.
Hormel Foods Corporation was included in 21 hedge funds’ portfolios at the end of March, compared to 15 hedge funds in our database with HRL holdings at the end of the previous quarter. At the end of this article we will also compare HRL to other stocks including TE Connectivity Ltd. (NYSE:TEL), Fiserv, Inc. (NASDAQ:FISV), and Equinix Inc (NASDAQ:EQIX) to get a better sense of its popularity.
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To the average investor, there are numerous indicators shareholders can use to evaluate their stock investments. A duo of the most under-the-radar indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outpace the market by a solid margin (see the details here).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in Hormel Foods Corporation (NYSE:HRL), worth close to $98.4 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $66.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock.
In addition, let’s take a look at some funds that initiated substantial positions in Hormel Foods during the first quarter.
With a general bullishness amongst the heavyweights, key money managers have jumped into Hormel Foods Corporation (NYSE:HRL) headfirst. Israel Englander’s Millennium Management assembled the most valuable position in Hormel Foods Corporation (NYSE:HRL). Millennium Management had $17.8 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $8.7 million investment in the stock during the quarter. The following funds were also among the new HRL investors: Matthew Tewksbury’s Stevens Capital Management, Ken Griffin’s Citadel Investment Group, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now review hedge fund activity in other stocks similar to Hormel Foods Corporation (NYSE:HRL). We will take a look at TE Connectivity Ltd. (NYSE:TEL), Fiserv, Inc. (NASDAQ:FISV), Equinix Inc (NASDAQ:EQIX), and Charter Communications, Inc. (NASDAQ:CHTR). All of these stocks’ market caps resemble HRL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEL | 27 | 965112 | 0 |
| FISV | 24 | 391667 | -3 |
| EQIX | 43 | 2977148 | -4 |
| CHTR | 98 | 12717703 | 9 |
As you can see these stocks had an average of 48 hedge funds with bullish positions and the average amount invested in these stocks was $4263 million. That figure was $255 million in HRL’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand Fiserv, Inc. (NASDAQ:FISV) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Hormel Foods Corporation (NYSE:HRL) is even less popular than FISV. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
