How Has Smart Money Been Trading Pilgrim’s Pride Corporation (PPC)?

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Pilgrim’s Pride Corporation (NASDAQ:PPC).

Is Pilgrim’s Pride Corporation (NASDAQ:PPC) a buy, sell, or hold? Money managers are in a pessimistic mood. The number of long hedge fund positions was trimmed by 1 in recent months. PPC was in 28 hedge funds’ portfolios at the end of September. There were 29 hedge funds in our database with PPC positions at the end of the previous quarter. At the end of this article we will also compare PPC to other stocks, including Wynn Resorts, Limited (NASDAQ:WYNN), Hudson City Bancorp, Inc. (NASDAQ:HCBK), and Targa Resources Partners LP (NYSE:NGLS) to get a better sense of its popularity.

In the eyes of most traders, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds trading at present, we look at the masters of this group, approximately 700 funds. These money managers shepherd most of the hedge fund industry’s total asset base, and by keeping track of their best investments, Insider Monkey has unsheathed a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s take a look at the latest action regarding Pilgrim’s Pride Corporation (NASDAQ:PPC).

How are hedge funds trading Pilgrim’s Pride Corporation (NASDAQ:PPC)?

Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Joel Greenblatt’s Gotham Asset Management has the biggest position in Pilgrim’s Pride Corporation (NASDAQ:PPC), worth close to $80.2 million, corresponding to 0.8% of its total 13F portfolio. On Gotham Asset Management’s heels is Cliff Asness of AQR Capital Management, with an $74 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Jim Simons’s Renaissance Technologies, Chase Coleman’s Tiger Global Management LLC and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Due to the fact that Pilgrim’s Pride Corporation (NASDAQ:PPC) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few money managers who sold off their full holdings by the end of the third quarter. Interestingly, Christian Leone’s Luxor Capital Group sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $22.6 million in stock. Larry Foley and Paul Farrell’s fund, Bronson Point Partners, also dropped its stock, about $5.8 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pilgrim’s Pride Corporation (NASDAQ:PPC) but similarly valued. These stocks are Wynn Resorts, Limited (NASDAQ:WYNN), Hudson City Bancorp, Inc. (NASDAQ:HCBK), Targa Resources Partners LP (NYSE:NGLS), and Newfield Exploration Co. (NYSE:NFX). This group of stocks’ market caps are closest to PPC’s market cap.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $662 million, while in PPC’s case, this figure stands at $390 million. Newfield Exploration Co. (NYSE:NFX) is the most popular stock in this table. On the other hand Targa Resources Partners LP (NYSE:NGLS) is the least popular one with only seven hedge funds holding shares. Pilgrim’s Pride Corporation (NASDAQ:PPC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Therefore, NFX might be a better candidate to consider a long position.