Was The Smart Money Right About Tyson Foods, Inc. (TSN)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Tyson Foods, Inc. (NYSE:TSN) based on that data and determine whether they were really smart about the stock.

Tyson Foods, Inc. (NYSE:TSN) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 AMETEK, Inc. (NYSE:AME), Genmab A/S (NASDAQ:GMAB), and Stanley Black & Decker, Inc. (NYSE:SWK) to gather more data points.

Bernard Horn of Polaris Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a look at the new hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).

Do Hedge Funds Think TSN Is A Good Stock To Buy Now?

At Q3’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards TSN over the last 25 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Yacktman Asset Management was the largest shareholder of Tyson Foods, Inc. (NYSE:TSN), with a stake worth $214.8 million reported as of the end of September. Trailing Yacktman Asset Management was AQR Capital Management, which amassed a stake valued at $119.7 million. Millennium Management, GLG Partners, and Polaris Capital 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 Appian Way Asset Management allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 7.66% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, earmarking 2.07 percent of its 13F equity portfolio to TSN.

Judging by the fact that Tyson Foods, Inc. (NYSE:TSN) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that elected to cut their positions entirely heading into Q4. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest position of the “upper crust” of funds watched by Insider Monkey, totaling about $27.9 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dropped about $7.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tyson Foods, Inc. (NYSE:TSN) but similarly valued. These stocks are AMETEK, Inc. (NYSE:AME), Genmab A/S (NASDAQ:GMAB), Stanley Black & Decker, Inc. (NYSE:SWK), Chewy, Inc. (NYSE:CHWY), United Microelectronics Corp (NYSE:UMC), Eversource Energy (NYSE:ES), and Las Vegas Sands Corp. (NYSE:LVS). This group of stocks’ market caps match TSN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $546 million. That figure was $865 million in TSN’s case. Las Vegas Sands Corp. (NYSE:LVS) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 9 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 overall hedge fund sentiment score for TSN is 60.8. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on TSN as the stock returned 15.8% since the end of Q3 (through 1/31) 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.

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