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Is HAIN Stock A Buy or Sell?

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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Hain Celestial Group, Inc. (NASDAQ:HAIN).

Is HAIN stock a buy? The Hain Celestial Group, Inc. (NASDAQ:HAIN) was in 23 hedge funds' portfolios at the end of December. The all time high for this statistic is 35. HAIN has experienced an increase in enthusiasm from smart money of late. There were 21 hedge funds in our database with HAIN holdings at the end of September. Our calculations also showed that HAIN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Glenn Welling Engaged Capital
Glenn Welling Engaged Capital

Glenn Welling of Engaged Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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 let's take a glance at the key hedge fund action regarding The Hain Celestial Group, Inc. (NASDAQ:HAIN).

Do Hedge Funds Think HAIN Is A Good Stock To Buy Now?

At the end of December, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HAIN over the last 22 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Engaged Capital was the largest shareholder of The Hain Celestial Group, Inc. (NASDAQ:HAIN), with a stake worth $642.3 million reported as of the end of December. Trailing Engaged Capital was Soros Fund Management, which amassed a stake valued at $83.3 million. Paradice Investment Management, Greenhouse Funds, and GAMCO Investors 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 Engaged Capital allocated the biggest weight to The Hain Celestial Group, Inc. (NASDAQ:HAIN), around 52.98% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, setting aside 4.31 percent of its 13F equity portfolio to HAIN.

As industrywide interest jumped, key money managers were breaking ground themselves. Maverick Capital, managed by Lee Ainslie, created the biggest position in The Hain Celestial Group, Inc. (NASDAQ:HAIN). Maverick Capital had $0.7 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital and Renee Yao's Neo Ivy Capital.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The Hain Celestial Group, Inc. (NASDAQ:HAIN) but similarly valued. These stocks are Kornit Digital Ltd. (NASDAQ:KRNT), Healthcare Realty Trust Inc (NYSE:HR), Blackstone Mortgage Trust Inc (NYSE:BXMT), Arvinas, Inc. (NASDAQ:ARVN), Rayonier Inc. (NYSE:RYN), Selective Insurance Group, Inc. (NASDAQ:SIGI), and Terreno Realty Corporation (NYSE:TRNO). This group of stocks' market values match HAIN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRNT,15,104173,-3 HR,23,172649,5 BXMT,17,141563,-7 ARVN,34,810897,8 RYN,16,384072,-1 SIGI,15,57325,-6 TRNO,9,22576,-6 Average,18.4,241894,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $965 million in HAIN's case. Arvinas, Inc. (NASDAQ:ARVN) is the most popular stock in this table. On the other hand Terreno Realty Corporation (NYSE:TRNO) is the least popular one with only 9 bullish hedge fund positions. The Hain Celestial Group, Inc. (NASDAQ:HAIN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HAIN is 54.7. 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately HAIN wasn't nearly as popular as these 30 stocks and hedge funds that were betting on HAIN were disappointed as the stock returned 5.6% since the end of December (through 4/19) 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.

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