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Here’s Why Nelson Capital Sold Hormel Foods Corp. (HRL)

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Jose Karlo Mari Tottoc
·3 min read
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Nelson Capital Management, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. In the letter, the fund discussed their interpretation of the Dot-Com Bubble 2.0, their asset transactions, tax updates, featured equity, and a special topic about the vaccine rollout. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

In their Q4 2020 investor letter, Nelson Capital Management mentioned Hormel Foods Corporation (NYSE: HRL) and shared their insights on the company. Hormel Foods Corporation is an Austin, Minnesota-based food company that currently has a $25.7 billion market capitalization. Since the beginning of the year, HRL delivered a 2.12% return, while its 12-month gains are up by 0.04%. As of April 01, 2021, the stock closed at $47.60 per share.

Here is what Nelson Capital Management has to say about Hormel Foods Corporation in their Q4 2020 investor letter:

"We had a quiet fourth quarter, making just one swap within our consumer staples sector. We sold our position in Hormel (tkr: HRL). Hormel has seen tailwinds from the pandemic, as the maker of Spam and Skippy peanut butter has experienced higher demand from nervous consumers seeking out products with longer shelf lives. The stock had risen 18% year-to-date and its price-to-earnings (P/E) ratio had expanded from 25x to over 31x. Hormel pays a 2% dividend which is lower than many of its peers in the consumer staples sector. Furthermore, Hormel’s Jennie-O Turkey brand has experienced disruption in recent years as raw material over- or undersupply has caused large swings in revenue that lead to unpredictability. We decided to seek out better opportunities within the sector, particularly looking for a more attractively valued company that pays a higher dividend and sells everyday products that people will buy even in times of economic distress."

Copyright: stocking / 123RF Stock Photo

Our calculations show that Hormel Foods Corporation (NYSE: HRL) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Hormel Foods Corporation was in 31 hedge fund portfolios, compared to 30 funds in the third quarter. HRL delivered a 2.12% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover 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 and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. 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:

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