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How Did Pilgrim’s Pride Corporation (PPC) Compare Against Hedge Fund Darlings in 2019?

Reymerlyn Martin

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned 31.2% in 2019. Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 41.3% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' consensus stock picks generate superior risk-adjusted returns. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Pilgrim's Pride Corporation (NASDAQ:PPC).

Is Pilgrim's Pride Corporation (NASDAQ:PPC) a good investment today? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets inched up by 5 lately. Our calculations also showed that PPC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In today’s marketplace there are plenty of formulas investors can use to assess stocks. A duo of the most useful formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the market by a very impressive margin (see the details here).

[caption id="attachment_26554" align="aligncenter" width="600"] John Burbank of Passport Capital[/caption]

John Burbank PASSPORT CAPITAL

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we're going to go over the fresh hedge fund action surrounding Pilgrim's Pride Corporation (NASDAQ:PPC).

What have hedge funds been doing with Pilgrim's Pride Corporation (NASDAQ:PPC)?

Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PPC over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, AQR Capital Management was the largest shareholder of Pilgrim's Pride Corporation (NASDAQ:PPC), with a stake worth $81 million reported as of the end of September. Trailing AQR Capital Management was GLG Partners, which amassed a stake valued at $60.9 million. D E Shaw, Citadel Investment Group, and Renaissance Technologies 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 Passport Capital allocated the biggest weight to Pilgrim's Pride Corporation (NASDAQ:PPC), around 12.32% of its 13F portfolio. Harvest Capital Strategies is also relatively very bullish on the stock, setting aside 5 percent of its 13F equity portfolio to PPC.

Now, specific money managers have jumped into Pilgrim's Pride Corporation (NASDAQ:PPC) headfirst. Passport Capital, managed by John Burbank, created the most valuable position in Pilgrim's Pride Corporation (NASDAQ:PPC). Passport Capital had $8 million invested in the company at the end of the quarter. Zach Schreiber's Point State Capital also made a $5.4 million investment in the stock during the quarter. The other funds with brand new PPC positions are David Harding's Winton Capital Management, Jonathan Barrett and Paul Segal's Luminus Management, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Pilgrim's Pride Corporation (NASDAQ:PPC) but similarly valued. We will take a look at ICON Public Limited Company (NASDAQ:ICLR), Euronet Worldwide, Inc. (NASDAQ:EEFT), Invesco Ltd. (NYSE:IVZ), and Canopy Growth Corporation (NYSE:CGC). This group of stocks' market values are similar to PPC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ICLR,20,613069,1 EEFT,35,322755,2 IVZ,24,198236,4 CGC,8,23222,4 Average,21.75,289321,2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $289 million. That figure was $264 million in PPC's case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 8 bullish hedge fund positions. Pilgrim's Pride Corporation (NASDAQ:PPC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on PPC as the stock returned 111% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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