Is Whole Foods Market, Inc. (WFM) a Good Buy?

Is Whole Foods Market, Inc. (NASDAQ:WFM) a bargain? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions improved by 1 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Harley-Davidson, Inc. (NYSE:HOG), POSCO (ADR) (NYSE:PKX), and Discovery Communications Inc. (NASDAQ:DISCA) to gather more data points.

In today’s marketplace there are a large number of signals investors use to size up stocks. A pair of the most under-the-radar signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the S&P 500 by a healthy margin (see the details here).

Now, we’re going to take a glance at the fresh action regarding Whole Foods Market, Inc. (NASDAQ:WFM).

How are hedge funds trading Whole Foods Market, Inc. (NASDAQ:WFM)?

At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Whole Foods Market, Inc. (NASDAQ:WFM). Renaissance Technologies has a $58.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Joshua Friedman and Mitchell Julis of Canyon Capital Advisors, with a $58.4 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Joel Greenblatt’s Gotham Asset Management, Robert Joseph Caruso’s Select Equity Group and Cliff Asness’ AQR Capital Management.

Consequently, specific money managers have been driving this bullishness. Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, established the most valuable position in Whole Foods Market, Inc. (NASDAQ:WFM). Canyon Capital Advisors had $58.4 million invested in the company at the end of the quarter. Sanford J. Colen’s Apex Capital also made a $19.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Edmond M. Safra’s EMS Capital, and Sanford J. Colen’s Apex Capital.

Let’s now review hedge fund activity in other stocks similar to Whole Foods Market, Inc. (NASDAQ:WFM). These stocks are Harley-Davidson, Inc. (NYSE:HOG), POSCO (ADR) (NYSE:PKX), Discovery Communications Inc. (NASDAQ:DISCA), and Markel Corporation (NYSE:MKL). This group of stocks’ market valuations are closest to WFM’s market valuation.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $503 million. That figure was $427 million in WFM’s case. Markel Corporation (NYSE:MKL) is the most popular stock in this table. On the other hand POSCO (ADR) (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Whole Foods Market, Inc. (NASDAQ:WFM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.