Were Hedge Funds Illusioned With Lamb Weston Holdings, Inc. (LW)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Lamb Weston Holdings, Inc. (NYSE:LW) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Lamb Weston Holdings, Inc. (NYSE:LW) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 42. LW investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 36 hedge funds in our database with LW positions at the end of the second quarter. Our calculations also showed that LW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind let’s analyze the recent hedge fund action surrounding Lamb Weston Holdings, Inc. (NYSE:LW).

David Brown of Hawk Ridge Management

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

At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LW over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hawk Ridge Management, managed by David Brown, holds the most valuable position in Lamb Weston Holdings, Inc. (NYSE:LW). Hawk Ridge Management has a $66.1 million position in the stock, comprising 4.2% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $53.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Oscar Hattink’s BlueDrive Global Investors, Jack Woodruff’s Candlestick Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position BlueDrive Global Investors allocated the biggest weight to Lamb Weston Holdings, Inc. (NYSE:LW), around 14.57% of its 13F portfolio. Hawk Ridge Management is also relatively very bullish on the stock, earmarking 4.25 percent of its 13F equity portfolio to LW.

Seeing as Lamb Weston Holdings, Inc. (NYSE:LW) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management cut the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $40.3 million in stock. Steve Cohen’s fund, Point72 Asset Management, also said goodbye to its stock, about $34.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 5 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Lamb Weston Holdings, Inc. (NYSE:LW). We will take a look at Anaplan, Inc. (NYSE:PLAN), SiteOne Landscape Supply, Inc. (NYSE:SITE), Sibanye Stillwater Limited (NYSE:SBSW), Credicorp Ltd. (NYSE:BAP), Owens Corning (NYSE:OC), Lattice Semiconductor Corporation (NASDAQ:LSCC), and Thoughtworks Holding Inc. (NASDAQ:TWKS). This group of stocks’ market caps match LW’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $617 million. That figure was $427 million in LW’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 9 bullish hedge fund positions. Lamb Weston Holdings, Inc. (NYSE:LW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LW is 43.3. 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 managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on LW as the stock returned 5.1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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Disclosure: None. This article was originally published at Insider Monkey.