With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was The Hershey Company (NYSE:HSY).
The Hershey Company (NYSE:HSY) has experienced a decrease in support from the world’s most elite money managers in recent months. The Hershey Company (NYSE:HSY) was in 38 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that HSY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Today there are tons of tools stock traders put to use to value their holdings. A duo of the most underrated tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a peek at the key hedge fund action surrounding The Hershey Company (NYSE:HSY).
Do Hedge Funds Think HSY Is A Good Stock To Buy Now?
At the end of June, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HSY over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the number one position in The Hershey Company (NYSE:HSY). Renaissance Technologies has a $556.1 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $140.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Brandon Haley’s Holocene Advisors and Ray Dalio’s Bridgewater Associates. In terms of the portfolio weights assigned to each position Kehrs Ridge Capital allocated the biggest weight to The Hershey Company (NYSE:HSY), around 2.13% of its 13F portfolio. Franklin Street Capital is also relatively very bullish on the stock, dishing out 1.48 percent of its 13F equity portfolio to HSY.
Due to the fact that The Hershey Company (NYSE:HSY) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers that slashed their full holdings in the second quarter. Intriguingly, Jack Woodruff’s Candlestick Capital Management said goodbye to the biggest investment of the 750 funds watched by Insider Monkey, worth about $29.3 million in stock. Claes Fornell’s fund, CSat Investment Advisory, also cut its stock, about $2.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds in the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Hershey Company (NYSE:HSY) but similarly valued. These stocks are ResMed Inc. (NYSE:RMD), XPeng Inc. (NYSE:XPEV), Cummins Inc. (NYSE:CMI), Xilinx, Inc. (NASDAQ:XLNX), TransDigm Group Incorporated (NYSE:TDG), Xcel Energy Inc (NASDAQ:XEL), and Brown-Forman Corporation (NYSE:BF). This group of stocks’ market values resemble HSY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RMD | 26 | 428212 | 1 |
| XPEV | 19 | 784609 | 0 |
| CMI | 45 | 1102223 | 8 |
| XLNX | 59 | 4162249 | 2 |
| TDG | 57 | 7351832 | -5 |
| XEL | 22 | 235410 | 4 |
| BF | 31 | 1667783 | -4 |
| Average | 37 | 2247474 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $2247 million. That figure was $1229 million in HSY’s case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand XPeng Inc. (NYSE:XPEV) is the least popular one with only 19 bullish hedge fund positions. The Hershey Company (NYSE:HSY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSY is 51.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on HSY as the stock returned 2.8% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
