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Is SYSCO (SYY) Stock A Buy or Sell?

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Abigail Fisher
·5 min read
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In this article we will analyze whether SYSCO Corporation (NYSE:SYY) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is SYSCO (SYY) stock a buy or sell? The smart money was buying. The number of long hedge fund positions increased by 7 in recent months. SYSCO Corporation (NYSE:SYY) was in 40 hedge funds' portfolios at the end of December. The all time high for this statistic is 42. Our calculations also showed that SYY isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 33 hedge funds in our database with SYY holdings at the end of September.

TRIAN PARTNERS
TRIAN PARTNERS

Nelson Peltz of Trian Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let's take a gander at the key hedge fund action encompassing SYSCO Corporation (NYSE:SYY).

Do Hedge Funds Think SYY Is A Good Stock To Buy Now?

At Q4's end, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the third quarter of 2020. By comparison, 28 hedge funds held shares or bullish call options in SYY a year ago. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in SYSCO Corporation (NYSE:SYY) was held by Trian Partners, which reported holding $1530 million worth of stock at the end of December. It was followed by Yacktman Asset Management with a $440 million position. Other investors bullish on the company included Holocene Advisors, Appaloosa Management LP, and Adage Capital Management. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to SYSCO Corporation (NYSE:SYY), around 22.64% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, earmarking 5.44 percent of its 13F equity portfolio to SYY.

As aggregate interest increased, specific money managers were leading the bulls' herd. Holocene Advisors, managed by Brandon Haley, assembled the largest position in SYSCO Corporation (NYSE:SYY). Holocene Advisors had $97.6 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $30.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP, and Mark R. Freeman's Socorro Asset Management.

Let's now take a look at hedge fund activity in other stocks similar to SYSCO Corporation (NYSE:SYY). These stocks are Freeport-McMoRan Inc. (NYSE:FCX), Liberty Broadband Corp (NASDAQ:LBRDA), Biogen Inc. (NASDAQ:BIIB), The Trade Desk, Inc. (NASDAQ:TTD), The Bank of New York Mellon Corporation (NYSE:BK), Microchip Technology Incorporated (NASDAQ:MCHP), and Cintas Corporation (NASDAQ:CTAS). This group of stocks' market valuations are similar to SYY's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCX,61,2664729,4 LBRDA,26,908617,1 BIIB,63,2752928,4 TTD,35,1195309,12 BK,47,4689872,-1 MCHP,45,961474,10 CTAS,36,746276,-2 Average,44.7,1988458,4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $1988 million. That figure was $2513 million in SYY's case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 26 bullish hedge fund positions. SYSCO Corporation (NYSE:SYY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SYY is 57.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. A small number of hedge funds were also right about betting on SYY as the stock returned 8% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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