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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Campbell Soup Company (NYSE:CPB) to find out whether there were any major changes in hedge funds' views.
Is CPB stock a buy? Hedge funds were in an optimistic mood. The number of bullish hedge fund positions increased by 1 recently. Campbell Soup Company (NYSE:CPB) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 40. Our calculations also showed that CPB isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At the moment there are several formulas investors put to use to evaluate stocks. Some of the most under-the-radar formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the broader indices by a solid amount (see the details here).
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now we're going to take a gander at the recent hedge fund action regarding Campbell Soup Company (NYSE:CPB).
Do Hedge Funds Think CPB Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CPB over the last 22 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Campbell Soup Company (NYSE:CPB), with a stake worth $146.3 million reported as of the end of December. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $68.1 million. Armistice Capital, AQR Capital Management, and Millennium 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 Kehrs Ridge Capital allocated the biggest weight to Campbell Soup Company (NYSE:CPB), around 2.72% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, designating 1.66 percent of its 13F equity portfolio to CPB.
Consequently, key hedge funds were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most outsized position in Campbell Soup Company (NYSE:CPB). Laurion Capital Management had $1.4 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Donald Sussman's Paloma Partners, Qing Li's Sciencast Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Campbell Soup Company (NYSE:CPB) but similarly valued. We will take a look at Arch Capital Group Ltd. (NASDAQ:ACGL), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Genuine Parts Company (NYSE:GPC), Mid America Apartment Communities Inc (NYSE:MAA), Elanco Animal Health Incorporated (NYSE:ELAN), Teledyne Technologies Incorporated (NYSE:TDY), and J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). This group of stocks' market valuations are closest to CPB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACGL,34,1460869,-7 BIP,14,51775,1 GPC,25,194872,2 MAA,26,338357,-1 ELAN,43,1493327,22 TDY,28,372237,-3 JBHT,26,330836,-12 Average,28,606039,0.3 [/table]
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 $606 million. That figure was $348 million in CPB's case. Elanco Animal Health Incorporated (NYSE:ELAN) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 14 bullish hedge fund positions. Campbell Soup Company (NYSE:CPB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPB is 53.6. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately CPB wasn't nearly as popular as these 30 stocks and hedge funds that were betting on CPB were disappointed as the stock returned 2.5% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.