Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Flowers Foods, Inc. (NYSE:FLO) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds' portfolios at the end of the fourth quarter of 2018. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Grupo Financiero Galicia S.A. (NASDAQ:GGAL), EnLink Midstream Partners LP (NYSE:ENLK), and Pure Storage, Inc. (NYSE:PSTG) to gather more data points.
In the financial world there are tons of methods stock market investors can use to analyze publicly traded companies. Some of the less utilized methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outpace their index-focused peers by a significant margin (see the details here).
Let's take a look at the latest hedge fund action encompassing Flowers Foods, Inc. (NYSE:FLO).
What have hedge funds been doing with Flowers Foods, Inc. (NYSE:FLO)?
At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in FLO a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Flowers Foods, Inc. (NYSE:FLO), which was worth $65.9 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $58.9 million worth of shares. Moreover, GAMCO Investors, AQR Capital Management, and Balyasny Asset Management were also bullish on Flowers Foods, Inc. (NYSE:FLO), allocating a large percentage of their portfolios to this stock.
Seeing as Flowers Foods, Inc. (NYSE:FLO) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few hedgies that slashed their full holdings last quarter. At the top of the heap, Joel Greenblatt's Gotham Asset Management dumped the biggest stake of all the hedgies watched by Insider Monkey, totaling an estimated $1.5 million in stock. Andrew Feldstein and Stephen Siderow's fund, Blue Mountain Capital, also cut its stock, about $0.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to Flowers Foods, Inc. (NYSE:FLO). We will take a look at Grupo Financiero Galicia S.A. (NASDAQ:GGAL), EnLink Midstream Partners LP (NYSE:ENLK), Pure Storage, Inc. (NYSE:PSTG), and InterXion Holding NV (NYSE:INXN). All of these stocks' market caps resemble FLO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GGAL,19,133358,4 ENLK,6,18606,2 PSTG,26,454069,-5 INXN,28,636554,-3 Average,19.75,310647,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $197 million in FLO's case. InterXion Holding NV (NYSE:INXN) is the most popular stock in this table. On the other hand EnLink Midstream Partners LP (NYSE:ENLK) is the least popular one with only 6 bullish hedge fund positions. Flowers Foods, Inc. (NYSE:FLO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on FLO, though not to the same extent, as the stock returned 17% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.