Hedge Funds Have Never Been This Bullish On Tyson Foods, Inc. (TSN)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Tyson Foods, Inc. (NYSE:TSN).
Tyson Foods, Inc. (NYSE:TSN) was in 48 hedge funds' portfolios at the end of the third quarter of 2019. TSN shareholders have witnessed an increase in hedge fund interest in recent months. There were 39 hedge funds in our database with TSN positions at the end of the previous quarter. Our calculations also showed that TSN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings, see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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_338182" align="aligncenter" width="500"]
Harold Levy of Iridian Asset Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We're going to take a peek at the new hedge fund action surrounding Tyson Foods, Inc. (NYSE:TSN).
What does smart money think about Tyson Foods, Inc. (NYSE:TSN)?
At Q3's end, a total of 48 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in TSN 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.
More specifically, AQR Capital Management was the largest shareholder of Tyson Foods, Inc. (NYSE:TSN), with a stake worth $477.8 million reported as of the end of September. Trailing AQR Capital Management was Iridian Asset Management, which amassed a stake valued at $203.9 million. Citadel Investment Group, Suvretta Capital Management, and GLG Partners 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 Passport Capital allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 13.24% of its portfolio. Columbus Hill Capital Management is also relatively very bullish on the stock, designating 9.8 percent of its 13F equity portfolio to TSN.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, initiated the most outsized position in Tyson Foods, Inc. (NYSE:TSN). Point72 Asset Management had $55.4 million invested in the company at the end of the quarter. Ken Heebner's Capital Growth Management also initiated a $34.5 million position during the quarter. The following funds were also among the new TSN investors: Aaron Cowen's Suvretta Capital Management, Robert Pohly's Samlyn Capital, and Jacob Doft's Highline Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Tyson Foods, Inc. (NYSE:TSN) but similarly valued. We will take a look at Public Service Enterprise Group Incorporated (NYSE:PEG), Consolidated Edison, Inc. (NYSE:ED), TE Connectivity Ltd. (NYSE:TEL), and Newmont Goldcorp Corporation (NYSE:NEM). All of these stocks' market caps are closest to TSN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PEG,18,838718,-5 ED,22,1396380,-4 TEL,30,1265055,3 NEM,41,868131,0 Average,27.75,1092071,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1092 million. That figure was $1717 million in TSN's case. Newmont Goldcorp Corporation (NYSE:NEM) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Tyson Foods, Inc. (NYSE:TSN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately TSN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on TSN were disappointed as the stock returned 0.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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