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Campbell Soup Company (CPB): Hedge Funds Cashing Out

Reymerlyn Martin
·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Campbell Soup Company (NYSE:CPB) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Campbell Soup Company (NYSE:CPB) has seen a decrease in hedge fund interest in recent months. Campbell Soup Company (NYSE:CPB) was in 32 hedge funds' portfolios at the end of June. The all time high for this statistics is 40. Our calculations also showed that CPB isn't among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding
David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 view the fresh hedge fund action surrounding Campbell Soup Company (NYSE:CPB).

Hedge fund activity in Campbell Soup Company (NYSE:CPB)

Heading into the third quarter of 2020, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPB over the last 20 quarters. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Campbell Soup Company (NYSE:CPB), which was worth $142.9 million at the end of the third quarter. On the second spot was Millennium Management which amassed $94.6 million worth of shares. AQR Capital Management, Candlestick Capital Management, and Armistice Capital 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 Kehrs Ridge Capital allocated the biggest weight to Campbell Soup Company (NYSE:CPB), around 7.33% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, designating 2.08 percent of its 13F equity portfolio to CPB.

Due to the fact that Campbell Soup Company (NYSE:CPB) has faced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of hedgies that slashed their entire stakes heading into Q3. Interestingly, Paul Marshall and Ian Wace's Marshall Wace LLP sold off the largest investment of the 750 funds tracked by Insider Monkey, valued at an estimated $20.1 million in stock, and Phill Gross and Robert Atchinson's Adage Capital Management was right behind this move, as the fund sold off about $8.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 8 funds heading into Q3.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Campbell Soup Company (NYSE:CPB) but similarly valued. These stocks are Essex Property Trust Inc (NYSE:ESS), Teladoc Health, Inc (NYSE:TDOC), Healthpeak Properties, Inc. (NYSE:PEAK), Tiffany & Co. (NYSE:TIF), Hologic, Inc. (NASDAQ:HOLX), BeiGene, Ltd. (NASDAQ:BGNE), and CarMax Inc (NYSE:KMX). All of these stocks' market caps match CPB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESS,28,551715,-3 TDOC,44,811816,8 PEAK,23,372112,-3 TIF,64,2401546,-5 HOLX,46,1546938,5 BGNE,13,3356980,2 KMX,46,1420392,9 Average,37.7,1494500,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $1494 million. That figure was $450 million in CPB's case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 13 bullish hedge fund positions. Campbell Soup Company (NYSE:CPB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPB is 39.6. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately CPB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CPB investors were disappointed as the stock returned -7% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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