We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Tyson Foods, Inc. (NYSE:TSN).
Is Tyson Foods, Inc. (NYSE:TSN) a bargain? Hedge funds are becoming more confident. The number of bullish hedge fund bets advanced by 5 lately. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a look at the key hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).
What does the smart money think about Tyson Foods, Inc. (NYSE:TSN)?
Heading into the second quarter of 2019, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the fourth quarter of 2018. By comparison, 29 hedge funds held shares or bullish call options in TSN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Tyson Foods, Inc. (NYSE:TSN) was held by AQR Capital Management, which reported holding $375.9 million worth of stock at the end of March. It was followed by Eminence Capital with a $289.9 million position. Other investors bullish on the company included Millennium Management, Point72 Asset Management, and GLG Partners.
Consequently, specific money managers were leading the bulls’ herd. Eminence Capital, managed by Ricky Sandler, created the largest position in Tyson Foods, Inc. (NYSE:TSN). Eminence Capital had $289.9 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $48.2 million position during the quarter. The other funds with brand new TSN positions are David Rosen’s Rubric Capital Management, Guy Shahar’s DSAM Partners, and Mark Kingdon’s Kingdon Capital.
Let’s also examine hedge fund activity in other stocks similar to Tyson Foods, Inc. (NYSE:TSN). These stocks are Twitter Inc (NYSE:TWTR), Spotify Technology S.A. (NYSE:SPOT), CRH PLC (NYSE:CRH), and Dollar Tree, Inc. (NASDAQ:DLTR). All of these stocks’ market caps resemble TSN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWTR | 46 | 1363199 | -3 |
| SPOT | 53 | 2210192 | 8 |
| CRH | 5 | 60693 | -3 |
| DLTR | 48 | 2546741 | -5 |
| Average | 38 | 1545206 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1545 million. That figure was $1535 million in TSN’s case. Spotify Technology S.A. (NYSE:SPOT) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 5 bullish hedge fund positions. Tyson Foods, Inc. (NYSE:TSN) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on TSN as the stock returned 11.1% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
