In this article we will check out the progression of hedge fund sentiment towards Freshpet Inc (NASDAQ:FRPT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Freshpet Inc (NASDAQ:FRPT) worth your attention right now? Hedge funds are getting more bullish. The number of bullish hedge fund positions advanced by 4 lately. Our calculations also showed that FRPT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are assumed to be underperforming, old financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the elite of this club, approximately 850 funds. It is estimated that this group of investors watch over most of the smart money's total capital, and by paying attention to their finest investments, Insider Monkey has come up with many investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_221556" align="aligncenter" width="400"] Richard Driehaus of Driehaus Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the latest hedge fund action regarding Freshpet Inc (NASDAQ:FRPT).
What have hedge funds been doing with Freshpet Inc (NASDAQ:FRPT)?
Heading into the second quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FRPT over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Rock Springs Capital Management was the largest shareholder of Freshpet Inc (NASDAQ:FRPT), with a stake worth $25.4 million reported as of the end of September. Trailing Rock Springs Capital Management was Driehaus Capital, which amassed a stake valued at $22.7 million. D E Shaw, Citadel Investment Group, and Fisher Asset 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 Pinz Capital allocated the biggest weight to Freshpet Inc (NASDAQ:FRPT), around 5.66% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 5.54 percent of its 13F equity portfolio to FRPT.
Now, key money managers were breaking ground themselves. Pinz Capital, managed by Matthew L Pinz, assembled the most outsized position in Freshpet Inc (NASDAQ:FRPT). Pinz Capital had $2.2 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron's Algert Coldiron Investors also initiated a $1.7 million position during the quarter. The following funds were also among the new FRPT investors: Paul Tudor Jones's Tudor Investment Corp, Minhua Zhang's Weld Capital Management, and Mika Toikka's AlphaCrest Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Freshpet Inc (NASDAQ:FRPT) but similarly valued. We will take a look at Taubman Centers, Inc. (NYSE:TCO), Gildan Activewear Inc (NYSE:GIL), Brighthouse Financial, Inc. (NASDAQ:BHF), and Qurate Retail, Inc. (NASDAQ:QRTEA). This group of stocks' market values match FRPT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCO,38,478517,12 GIL,22,274827,0 BHF,25,372976,-18 QRTEA,32,477820,-7 Average,29.25,401035,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $401 million. That figure was $141 million in FRPT's case. Taubman Centers, Inc. (NYSE:TCO) is the most popular stock in this table. On the other hand Gildan Activewear Inc (NYSE:GIL) is the least popular one with only 22 bullish hedge fund positions. Freshpet Inc (NASDAQ:FRPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on FRPT as the stock returned 27.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.