After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards TreeHouse Foods Inc. (NYSE:THS).
Is THS stock a buy? TreeHouse Foods Inc. (NYSE:THS) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 32. THS has experienced a decrease in enthusiasm from smart money in recent months. There were 30 hedge funds in our database with THS holdings at the end of September. Our calculations also showed that THS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Now let’s analyze the fresh hedge fund action encompassing TreeHouse Foods Inc. (NYSE:THS).
Do Hedge Funds Think THS Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in THS over the last 22 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, JANA Partners was the largest shareholder of TreeHouse Foods Inc. (NYSE:THS), with a stake worth $86.4 million reported as of the end of December. Trailing JANA Partners was Renaissance Technologies, which amassed a stake valued at $46.4 million. Lakewood Capital Management, D E Shaw, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to TreeHouse Foods Inc. (NYSE:THS), around 5.85% of its 13F portfolio. Lakewood Capital Management is also relatively very bullish on the stock, earmarking 0.65 percent of its 13F equity portfolio to THS.
Since TreeHouse Foods Inc. (NYSE:THS) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers who were dropping their entire stakes by the end of the fourth quarter. At the top of the heap, George McCabe’s Portolan Capital Management sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $11.9 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $2.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 6 funds by the end of the fourth quarter.
Let’s now review hedge fund activity in other stocks similar to TreeHouse Foods Inc. (NYSE:THS). We will take a look at Burning Rock Biotech Limited (NASDAQ:BNR), Phreesia, Inc. (NYSE:PHR), Chimera Investment Corporation (NYSE:CIM), Accolade, Inc. (NASDAQ:ACCD), Spirit Airlines Incorporated (NASDAQ:SAVE), Workhorse Group, Inc. (NASDAQ:WKHS), and Bottomline Technologies (NASDAQ:EPAY). This group of stocks’ market values resemble THS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNR | 12 | 177719 | 1 |
| PHR | 26 | 250171 | 4 |
| CIM | 16 | 79263 | -4 |
| ACCD | 21 | 256654 | 10 |
| SAVE | 23 | 213678 | -4 |
| WKHS | 16 | 90839 | 3 |
| EPAY | 18 | 149869 | -3 |
| Average | 18.9 | 174028 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $219 million in THS’s case. Phreesia, Inc. (NYSE:PHR) is the most popular stock in this table. On the other hand Burning Rock Biotech Limited (NASDAQ:BNR) is the least popular one with only 12 bullish hedge fund positions. TreeHouse Foods Inc. (NYSE:THS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for THS is 64.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on THS as the stock returned 19.8% since the end of Q4 (through 4/19) 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.
