We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Campbell Soup Company (NYSE:CPB) based on that data.
Campbell Soup Company (NYSE:CPB) was in 40 hedge funds' portfolios at the end of the first quarter of 2020. CPB has experienced an increase in hedge fund interest of late. There were 29 hedge funds in our database with CPB positions at the end of the previous quarter. Our calculations also showed that CPB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_339352" align="aligncenter" width="394"] Joe Huber of Huber Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the key hedge fund action encompassing Campbell Soup Company (NYSE:CPB).
How are hedge funds trading Campbell Soup Company (NYSE:CPB)?
At Q1's end, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the fourth quarter of 2019. By comparison, 28 hedge funds held shares or bullish call options in CPB a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Campbell Soup Company (NYSE:CPB), which was worth $86 million at the end of the third quarter. On the second spot was Holocene Advisors which amassed $46.7 million worth of shares. Citadel Investment Group, AQR Capital Management, and Armistice Capital 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 GRT Capital Partners allocated the biggest weight to Campbell Soup Company (NYSE:CPB), around 3.32% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, dishing out 2.48 percent of its 13F equity portfolio to CPB.
Now, key money managers were breaking ground themselves. Renaissance Technologies, created the most outsized position in Campbell Soup Company (NYSE:CPB). Renaissance Technologies had $86 million invested in the company at the end of the quarter. Steven Boyd's Armistice Capital also initiated a $22.1 million position during the quarter. The other funds with new positions in the stock are Joe Huber's Huber Capital Management, Steve Cohen's Point72 Asset Management, and Greg Eisner's Engineers Gate Manager.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Campbell Soup Company (NYSE:CPB) but similarly valued. We will take a look at Trip.com Group Limited (NASDAQ:TCOM), Grifols SA (NASDAQ:GRFS), Genmab A/S (NASDAQ:GMAB), and Align Technology, Inc. (NASDAQ:ALGN). This group of stocks' market caps match CPB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCOM,31,966859,0 GRFS,23,700219,2 GMAB,14,130319,2 ALGN,39,1396832,-1 Average,26.75,798557,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $799 million. That figure was $378 million in CPB's case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Campbell Soup Company (NYSE:CPB) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately CPB wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CPB were disappointed as the stock returned 11.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.