Were Hedge Funds Right About Tyson Foods, Inc. (TSN)?

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Tyson Foods, Inc. (NYSE:TSN).

Is Tyson Foods, Inc. (NYSE:TSN) the right investment to pursue these days? The best stock pickers were turning bullish. The number of bullish hedge fund bets advanced by 5 recently. Tyson Foods, Inc. (NYSE:TSN) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistic is 58. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 28 hedge funds in our database with TSN holdings at the end of March.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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 are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s view the recent hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).

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

At second quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TSN over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Yacktman Asset Management, managed by Donald Yacktman, holds the biggest position in Tyson Foods, Inc. (NYSE:TSN). Yacktman Asset Management has a $201.2 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $150.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Noam Gottesman’s GLG Partners, Bernard Horn’s Polaris Capital Management and Ray Dalio’s Bridgewater Associates. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 1.95% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 1.77 percent of its 13F equity portfolio to TSN.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Tyson Foods, Inc. (NYSE:TSN) headfirst. Candlestick Capital Management, managed by Jack Woodruff, established the largest position in Tyson Foods, Inc. (NYSE:TSN). Candlestick Capital Management had $20.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.5 million position during the quarter. The following funds were also among the new TSN investors: Andrew Weiss’s Weiss Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Matthew Tewksbury’s Stevens Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Tyson Foods, Inc. (NYSE:TSN). We will take a look at Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), Rogers Communications Inc. (NYSE:RCI), Sirius XM Holdings Inc (NASDAQ:SIRI), Genmab A/S (NASDAQ:GMAB), Ball Corporation (NYSE:BLL), and West Pharmaceutical Services Inc. (NYSE:WST). This group of stocks’ market caps are similar to TSN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $744 million in TSN’s case. Ball Corporation (NYSE:BLL) 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 61.4. 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 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on TSN as the stock returned 11.2% since the end of Q2 (through 11/5) 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.