World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Kellogg Company (NYSE:K) was in 30 hedge funds’ portfolios at the end of the third quarter of 2015. Kellogg has experienced an increase in activity from the world’s largest hedge funds of late. There were 22 hedge funds in our database with Kellogg positions at the end of the previous quarter. At the end of this article we will also compare Kellogg to other stocks including Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), The Allstate Corporation (NYSE:ALL), and AvalonBay Communities Inc (NYSE:AVB) to get a better sense of its popularity.
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To the average investor there are a multitude of tools stock traders employ to assess their holdings. A pair of the best tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top fund managers can trounce the broader indices by a healthy amount (see the details here).
Keeping this in mind, let’s check out the recent action surrounding Kellogg Company (NYSE:K).
What does the smart money think about Kellogg Company (NYSE:K)?
At the Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Kellogg Company (NYSE:K). Citadel Investment Group has a $176.7 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $102.7 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions encompass Israel Englander’s Millennium Management and Richard S. Pzena’s Pzena Investment Management.
As one would reasonably expect, some big names have been driving this bullishness. JANA Partners, managed by Barry Rosenstein, initiated the largest position in Kellogg Company (NYSE:K). JANA Partners had $65.3 million invested in the company at the end of the quarter. Jonathon Jacobson’s Highfields Capital Management also made a $31.1 million investment in the stock during the quarter. The other funds with brand new K positions are Peter Muller’s PDT Partners, Alexander Mitchell’s Scopus Asset Management, and Jim Simons’s Renaissance Technologies.
Let’s now review hedge fund activity in other stocks similar to Kellogg Company (NYSE:K). These stocks are Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), The Allstate Corporation (NYSE:ALL), AvalonBay Communities Inc (NYSE:AVB), and SYSCO Corporation (NYSE:SYY). This group of stocks’ market caps are similar to K’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHT | 9 | 81505 | 4 |
| ALL | 39 | 1529914 | -1 |
| AVB | 24 | 634821 | 2 |
| SYY | 30 | 3454838 | 1 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $1.43 billion. The Allstate Corporation (NYSE:ALL) is the most popular stock in this table with 39 funds holding stakes in the company, while Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT) is the least popular one. Kellogg Company (NYSE:K) is not the most popular stock in this group, but hedge fund interest is still above average. Moreover, the funds we track hold $779 million worth of Kellogg’s shares. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ALL might be a better candidate to consider a long position.
