Is The Hershey Company (NYSE:HSY) the right pick for your portfolio? Hedge funds are taking a pessimistic view. The number of long hedge fund positions were trimmed by 2 in recent months.
If you’d ask most stock holders, hedge funds are perceived as slow, outdated investment tools of the past. While there are greater than 8000 funds trading today, we at Insider Monkey look at the elite of this club, about 450 funds. Most estimates calculate that this group controls most of the hedge fund industry’s total asset base, and by keeping an eye on their best investments, we have identified a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
With all of this in mind, we’re going to take a peek at the recent action regarding The Hershey Company (NYSE:HSY).
What does the smart money think about The Hershey Company (NYSE:HSY)?
At the end of the first quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of -8% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably.
When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in The Hershey Company (NYSE:HSY), worth close to $243.9 million, accounting for 0.6% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which held a $36.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include David Harding’s Winton Capital Management, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.
Judging by the fact that The Hershey Company (NYSE:HSY) has experienced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few fund managers who were dropping their full holdings at the end of the first quarter. It’s worth mentioning that Ken Gray and Steve Walsh’s Bryn Mawr Capital cut the biggest position of the “upper crust” of funds we monitor, comprising close to $18 million in stock., and Anand Parekh of Alyeska Investment Group was right behind this move, as the fund dropped about $12.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds at the end of the first quarter.
How have insiders been trading The Hershey Company (NYSE:HSY)?
Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the latest six-month time frame, The Hershey Company (NYSE:HSY) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to The Hershey Company (NYSE:HSY). These stocks are Tootsie Roll Industries, Inc. (NYSE:TR), Cosan Limited (USA) (NYSE:CZZ), and Mondelez International Inc (NASDAQ:MDLZ). All of these stocks are in the confectioners industry and their market caps are similar to HSY’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Tootsie Roll Industries, Inc. (NYSE:TR) | 6 | 0 | 1 |
| Cosan Limited (USA) (NYSE:CZZ) | 16 | 0 | 0 |
| Mondelez International Inc (NASDAQ:MDLZ) | 69 | 1 | 0 |
With the results demonstrated by Insider Monkey’s strategies, retail investors should always pay attention to hedge fund and insider trading activity, and The Hershey Company (NYSE:HSY) applies perfectly to this mantra.
