We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Hormel Foods Corporation (NYSE:HRL) the right investment to pursue these days? The best stock pickers are becoming less confident. The number of long hedge fund positions shrunk by 2 lately. HRL was in 27 hedge funds’ portfolios at the end of the third quarter of 2016. There were 29 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 Omnicom Group Inc. (NYSE:OMC), L Brands Inc (NYSE:LB), and JD.Com Inc (ADR) (NASDAQ:JD) to get a better sense of its popularity.
Follow Hormel Foods Corp (NYSE:HRL)
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Hedge fund activity in Hormel Foods Corporation (NYSE:HRL)
Heading into the fourth quarter of 2016, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a 7% decline from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Hormel Foods Corporation (NYSE:HRL). Citadel Investment Group has a $228.4 million position in the stock. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $92.1 million position. Remaining hedge funds and institutional investors that hold long positions consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Dmitry Balyasny’s Balyasny Asset Management and Israel Englander’s Millennium Management.
Due to the fact that Hormel Foods Corporation (NYSE:HRL) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their positions entirely by the end of the third quarter. Intriguingly, Jim Simons’ Renaissance Technologies sold off the biggest position of all the hedgies monitored by Insider Monkey, worth close to $30 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $4.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Hormel Foods Corporation (NYSE:HRL). We will take a look at Omnicom Group Inc. (NYSE:OMC), L Brands Inc (NYSE:LB), JD.Com Inc (ADR) (NASDAQ:JD), and Cummins Inc. (NYSE:CMI). This group of stocks’ market valuations resemble HRL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMC | 21 | 732697 | -3 |
| LB | 32 | 1319885 | 3 |
| JD | 44 | 7410928 | -7 |
| CMI | 29 | 510425 | 1 |
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $2.5 billion. That figure was $707 million in HRL’s case. JD.Com Inc (ADR) (NASDAQ:JD) is the most popular stock in this table. On the other hand Omnicom Group Inc. (NYSE:OMC) is the least popular one with only 21 bullish hedge fund positions. Hormel Foods Corporation (NYSE:HRL) 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. In this regard JD might be a better candidate to consider a long position.
Disclosure: None
