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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Post Holdings Inc (NYSE:POST).
Is Post Holdings Inc (NYSE:POST) the right investment to pursue these days? Investors who are in the know were turning bullish. The number of long hedge fund positions rose by 6 in recent months. Post Holdings Inc (NYSE:POST) was in 33 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 44. Our calculations also showed that POST isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are numerous tools market participants use to appraise their stock investments. A duo of the most underrated tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Gavin Saitowitz of Prelude Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to go over the latest hedge fund action encompassing Post Holdings Inc (NYSE:POST).
Do Hedge Funds Think POST Is A Good Stock To Buy Now?
At the end of March, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in POST over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Route One Investment Company, managed by William Duhamel, holds the largest position in Post Holdings Inc (NYSE:POST). Route One Investment Company has a $740.1 million position in the stock, comprising 18.7% of its 13F portfolio. The second largest stake is held by Iridian Asset Management, led by David Cohen and Harold Levy, holding a $224.8 million position; 3.8% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism contain Matthew Stadelman's Diamond Hill Capital, Roberto Mignone's Bridger Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Route One Investment Company allocated the biggest weight to Post Holdings Inc (NYSE:POST), around 18.66% of its 13F portfolio. AREX Capital Management is also relatively very bullish on the stock, designating 10.8 percent of its 13F equity portfolio to POST.
As one would reasonably expect, key hedge funds were leading the bulls' herd. AREX Capital Management, managed by Andrew Rechtschaffen, created the largest position in Post Holdings Inc (NYSE:POST). AREX Capital Management had $18.4 million invested in the company at the end of the quarter. Brian Scudieri's Kehrs Ridge Capital also made a $10.6 million investment in the stock during the quarter. The following funds were also among the new POST investors: Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), Paul Tudor Jones's Tudor Investment Corp, and Brandon Haley's Holocene Advisors.
Let's now review hedge fund activity in other stocks similar to Post Holdings Inc (NYSE:POST). These stocks are Synovus Financial Corp. (NYSE:SNV), Dicks Sporting Goods Inc (NYSE:DKS), TG Therapeutics Inc (NASDAQ:TGTX), APA Corporation (NASDAQ:APA), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), Change Healthcare Inc. (NASDAQ:CHNG), and Stifel Financial Corp. (NYSE:SF). This group of stocks' market valuations are similar to POST's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNV,30,264409,-3 DKS,31,852354,-11 TGTX,27,859565,-11 APA,42,497934,7 PNFP,14,70443,1 CHNG,56,1845472,11 SF,15,190899,-3 Average,30.7,654439,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $654 million. That figure was $1568 million in POST's case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is the least popular one with only 14 bullish hedge fund positions. Post Holdings Inc (NYSE:POST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for POST is 55.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately POST wasn't nearly as popular as these 5 stocks and hedge funds that were betting on POST were disappointed as the stock returned 3.5% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.