ConAgra Foods, Inc. (CAG): Are Hedge Funds Right About This Stock?

Is ConAgra Foods, Inc. (NYSE:CAG) a buy?

To many of your peers, hedge funds are perceived as useless, outdated financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, Insider Monkey aim at the masters of this club, close to 525 funds. It is assumed that this group controls most of all hedge funds’ total capital, and by paying attention to their highest quality stock picks, we’ve deciphered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as crucial, bullish insider trading sentiment is a second way to analyze the stock market universe. As the old adage goes: there are many motivations for an executive to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).

What’s more, we’re going to examine the recent info surrounding ConAgra Foods, Inc. (NYSE:CAG).

Hedge fund activity in ConAgra Foods, Inc. (NYSE:CAG)

Heading into Q3, a total of 32 of the hedge funds we track held long positions in this stock, a change of 7% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly.

ConAgra Foods, Inc. (NYSE:CAG)When using filings from the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the most valuable position in ConAgra Foods, Inc. (NYSE:CAG). Adage Capital Management has a $199.2 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Diamond Hill Capital, managed by Ric Dillon, which held a $183.5 million position; 2% of its 13F portfolio is allocated to the company. Remaining hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.

With a general bullishness amongst the titans, specific money managers have jumped into ConAgra Foods, Inc. (NYSE:CAG) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in ConAgra Foods, Inc. (NYSE:CAG). Adage Capital Management had 199.2 million invested in the company at the end of the quarter. Ric Dillon’s Diamond Hill Capital also initiated a $183.5 million position during the quarter. The other funds with brand new CAG positions are Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies, and Israel Englander’s Millennium Management.

What do corporate executives and insiders think about ConAgra Foods, Inc. (NYSE:CAG)?

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, ConAgra Foods, Inc. (NYSE:CAG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to ConAgra Foods, Inc. (NYSE:CAG). These stocks are McCormick & Company, Incorporated (NYSE:MKC), Kellogg Company (NYSE:K), The J.M. Smucker Company (NYSE:SJM), Mead Johnson Nutrition CO (NYSE:MJN), and Campbell Soup Company (NYSE:CPB). This group of stocks belong to the processed & packaged goods industry and their market caps are closest to CAG’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
McCormick & Company, Incorporated (NYSE:MKC) 13 0 0
Kellogg Company (NYSE:K) 17 0 0
The J.M. Smucker Company (NYSE:SJM) 20 0 0
Mead Johnson Nutrition CO (NYSE:MJN) 42 0 0
Campbell Soup Company (NYSE:CPB) 20 0 0

Using the results explained by our research, average investors should always pay attention to hedge fund and insider trading activity, and ConAgra Foods, Inc. (NYSE:CAG) is an important part of this process.

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