Is The Hershey Company (HSY) Going to Burn These Hedge Funds?
The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards The Hershey Company (NYSE:HSY).
The Hershey Company (NYSE:HSY) shareholders have witnessed an increase in support from the world's most elite money managers lately. The Hershey Company (NYSE:HSY) was in 42 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that HSY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let's take a glance at the key hedge fund action encompassing The Hershey Company (NYSE:HSY).
Do Hedge Funds Think HSY Is A Good Stock To Buy Now?
At first quarter's end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the fourth quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in HSY a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Hershey Company (NYSE:HSY) was held by Renaissance Technologies, which reported holding $531.6 million worth of stock at the end of December. It was followed by AQR Capital Management with a $138.4 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Holocene Advisors. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to The Hershey Company (NYSE:HSY), around 2.43% of its 13F portfolio. Te Ahumairangi Investment Management is also relatively very bullish on the stock, setting aside 0.67 percent of its 13F equity portfolio to HSY.
As aggregate interest increased, key money managers have jumped into The Hershey Company (NYSE:HSY) headfirst. Alyeska Investment Group, managed by Anand Parekh, assembled the largest position in The Hershey Company (NYSE:HSY). Alyeska Investment Group had $49.6 million invested in the company at the end of the quarter. Qing Li's Sciencast Management also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new HSY investors: Minhua Zhang's Weld Capital Management, Jinghua Yan's TwinBeech Capital, and Alec Litowitz and Ross Laser's Magnetar Capital.
Let's check out hedge fund activity in other stocks similar to The Hershey Company (NYSE:HSY). We will take a look at Wayfair Inc (NYSE:W), Yum! Brands, Inc. (NYSE:YUM), Stanley Black & Decker, Inc. (NYSE:SWK), D.R. Horton, Inc. (NYSE:DHI), CoStar Group Inc (NASDAQ:CSGP), TAL Education Group (NYSE:TAL), and PACCAR Inc (NASDAQ:PCAR). This group of stocks' market caps match HSY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position W,37,4012752,-3 YUM,32,751481,-1 SWK,33,993045,-5 DHI,50,2174422,-14 CSGP,43,2784728,-8 TAL,38,1373412,9 PCAR,28,626282,-6 Average,37.3,1816589,-4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1817 million. That figure was $1268 million in HSY's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand PACCAR Inc (NASDAQ:PCAR) is the least popular one with only 28 bullish hedge fund positions. The Hershey Company (NYSE:HSY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HSY is 69.1. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on HSY, though not to the same extent, as the stock returned 8.3% since Q1 (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
