Should You Buy The Hain Celestial Group, Inc. (HAIN)?

The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on The Hain Celestial Group, Inc. (NASDAQ:HAIN) in order to identify whether reputable and successful top money managers continue to believe in its potential.

The Hain Celestial Group, Inc. (NASDAQ:HAIN) investors should be aware of an increase in hedge fund sentiment in recent months. HAIN was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with HAIN holdings at the end of the previous quarter. At the end of this article we will also compare HAIN to other stocks including AMC Networks Inc (NASDAQ:AMCX), Cytec Industries Inc (NYSE:CYT), and Liberty Broadband Corp (NASDAQ:LBRDK) to get a better sense of its popularity.

According to most stock holders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are greater than 8000 funds in operation at the moment, Our researchers look at the crème de la crème of this group, approximately 700 funds. Most estimates calculate that this group of people shepherd most of the smart money’s total capital, and by watching their top equity investments, Insider Monkey has formulated a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s take a look at the latest action encompassing The Hain Celestial Group, Inc. (NASDAQ:HAIN).

How have hedgies been trading The Hain Celestial Group, Inc. (NASDAQ:HAIN)?

Heading into Q4, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 93% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Coatue Management, managed by Philippe Laffont, holds the number one position in The Hain Celestial Group, Inc. (NASDAQ:HAIN). Coatue Management has a $208.9 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $41.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions comprise Jim Simons’ Renaissance Technologies, Mario Gabelli’s GAMCO Investors and Matthew Hulsizer’s PEAK6 Capital Management.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most outsized position in The Hain Celestial Group, Inc. (NASDAQ:HAIN). Millennium Management had $41.8 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $31.7 million investment in the stock during the quarter. The following funds were also among the new HAIN investors: Joel Greenblatt’s Gotham Asset Management, Neil Chriss’s Hutchin Hill Capital, and George Hall’s Clinton Group.

Let’s check out hedge fund activity in other stocks similar to The Hain Celestial Group, Inc. (NASDAQ:HAIN). We will take a look at AMC Networks Inc (NASDAQ:AMCX), Cytec Industries Inc (NYSE:CYT), Liberty Broadband Corp (NASDAQ:LBRDK), and Assurant, Inc. (NYSE:AIZ). This group of stocks’ market valuations match HAIN’s market valuation.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $661 million. That figure was $416 million in HAIN’s case. Cytec Industries Inc (NYSE:CYT) is the most popular stock in this table. On the other hand Assurant, Inc. (NYSE:AIZ) is the least popular one with only 20 bullish hedge fund positions. The Hain Celestial Group, Inc. (NASDAQ:HAIN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CYT might be a better candidate to consider a long position.