Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Flowers Foods, Inc. (NYSE:FLO)? The smart money sentiment can provide an answer to this question.
Flowers Foods, Inc. (NYSE:FLO) has seen an increase in hedge fund sentiment in recent months. FLO was in 20 hedge funds' portfolios at the end of the third quarter of 2018. There were 17 hedge funds in our database with FLO holdings at the end of the previous quarter. Our calculations also showed that flo isn't among the 30 most popular stocks among hedge funds.
To the average investor there are plenty of signals stock traders have at their disposal to grade publicly traded companies. A duo of the less utilized signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outpace their index-focused peers by a superb margin (see the details here).
Let's review the fresh hedge fund action regarding Flowers Foods, Inc. (NYSE:FLO).
What does the smart money think about Flowers Foods, Inc. (NYSE:FLO)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FLO over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Flowers Foods, Inc. (NYSE:FLO) was held by Diamond Hill Capital, which reported holding $64.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $60.4 million position. Other investors bullish on the company included GAMCO Investors, AQR Capital Management, and Royce & Associates.
Consequently, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Flowers Foods, Inc. (NYSE:FLO). Arrowstreet Capital had $0.6 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser's Magnetar Capital also made a $0.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Frederick DiSanto's Ancora Advisors.
Let's check out hedge fund activity in other stocks similar to Flowers Foods, Inc. (NYSE:FLO). We will take a look at Macquarie Infrastructure Corporation (NYSE:MIC), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), Versum Materials, Inc. (NYSE:VSM), and Equity Commonwealth (NYSE:EQC). All of these stocks' market caps are similar to FLO's market cap.
Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MIC,25,318358,-4 RBA,15,117724,5 VSM,21,543083,4 EQC,17,297467,-7 Average,19.5,319158,-0.5 [/table]
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As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $184 million in FLO's case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) is the least popular one with only 15 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard MIC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.