We can judge whether TreeHouse Foods Inc. (NYSE:THS) 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 when we factor in known risk factors.
Is TreeHouse Foods Inc. (NYSE:THS) the right pick for your portfolio? The smart money is turning bullish. The number of bullish hedge fund positions inched up by 4 recently. Our calculations also showed that ths isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the key hedge fund action regarding TreeHouse Foods Inc. (NYSE:THS).
What does the smart money think about TreeHouse Foods Inc. (NYSE:THS)?
Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the fourth quarter of 2018. By comparison, 20 hedge funds held shares or bullish call options in THS 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.
Among these funds, Renaissance Technologies held the most valuable stake in TreeHouse Foods Inc. (NYSE:THS), which was worth $35.7 million at the end of the first quarter. On the second spot was Fisher Asset Management which amassed $34.9 million worth of shares. Moreover, D E Shaw, Balyasny Asset Management, and GLG Partners were also bullish on TreeHouse Foods Inc. (NYSE:THS), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. AQR Capital Management, managed by Cliff Asness, initiated the largest position in TreeHouse Foods Inc. (NYSE:THS). AQR Capital Management had $11.4 million invested in the company at the end of the quarter. Principal Global Investors's Columbus Circle Investors also made a $7.8 million investment in the stock during the quarter. The other funds with brand new THS positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Matthew Hulsizer's PEAK6 Capital Management, and Matthew Tewksbury's Stevens Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as TreeHouse Foods Inc. (NYSE:THS) but similarly valued. These stocks are Spirit Airlines Incorporated (NYSE:SAVE), China Biologic Products Holdings, Inc. (NASDAQ:CBPO), Manhattan Associates, Inc. (NASDAQ:MANH), and Darling Ingredients Inc. (NYSE:DAR). This group of stocks' market values are similar to THS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAVE,34,381981,4 CBPO,8,130192,1 MANH,18,337275,-2 DAR,19,210442,1 Average,19.75,264973,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $230 million in THS's case. Spirit Airlines Incorporated (NYSE:SAVE) is the most popular stock in this table. On the other hand China Biologic Products Holdings, Inc.(NASDAQ:CBPO) is the least popular one with only 8 bullish hedge fund positions. TreeHouse Foods Inc. (NYSE:THS) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately THS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on THS were disappointed as the stock returned -18.6% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.