Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2019. In this article we are going to take a look at smart money sentiment towards Conagra Brands, Inc. (NYSE:CAG).
Conagra Brands, Inc. (NYSE:CAG) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 33 hedge funds’ portfolios at the end of the first quarter of 2019. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Live Nation Entertainment, Inc. (NYSE:LYV), Seagate Technology plc (NASDAQ:STX), and Huntington Bancshares Incorporated (NASDAQ:HBAN) to gather more data points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to check out the recent hedge fund action regarding Conagra Brands, Inc. (NYSE:CAG).
What have hedge funds been doing with Conagra Brands, Inc. (NYSE:CAG)?
Heading into the second quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CAG over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, JANA Partners held the most valuable stake in Conagra Brands, Inc. (NYSE:CAG), which was worth $415 million at the end of the first quarter. On the second spot was GAMCO Investors which amassed $52.1 million worth of shares. Moreover, Soros Fund Management, Balyasny Asset Management, and Citadel Investment Group were also bullish on Conagra Brands, Inc. (NYSE:CAG), allocating a large percentage of their portfolios to this stock.
Because Conagra Brands, Inc. (NYSE:CAG) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there were a few hedge funds who sold off their full holdings last quarter. Intriguingly, David Costen Haley’s HBK Investments dumped the biggest investment of the 700 funds watched by Insider Monkey, worth about $23.2 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund dropped about $23.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Conagra Brands, Inc. (NYSE:CAG). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Seagate Technology plc (NASDAQ:STX), Huntington Bancshares Incorporated (NASDAQ:HBAN), and WPP plc (NYSE:WPP). All of these stocks’ market caps are similar to CAG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYV | 39 | 1020951 | 2 |
| STX | 24 | 2033293 | -2 |
| HBAN | 28 | 100376 | 0 |
| WPP | 11 | 52078 | 0 |
| Average | 25.5 | 801675 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $802 million. That figure was $812 million in CAG’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand WPP plc (NYSE:WPP) is the least popular one with only 11 bullish hedge fund positions. Conagra Brands, Inc. (NYSE:CAG) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CAG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CAG were disappointed as the stock returned -2.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
