Is Hormel Foods Corporation (NYSE:HRL) a good investment now? The smart money is becoming less confident. The number of long hedge fund bets were trimmed by 4 lately.
According to most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the masters of this club, close to 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by watching their top picks, we have brought to light 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 per 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 24 percentage points in 7 months (see the details here).
Equally as key, positive insider trading activity is a second way to break down the marketplace. Obviously, there are lots of motivations for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this strategy if piggybackers know where to look (learn more here).
Keeping this in mind, we’re going to take a look at the latest action surrounding Hormel Foods Corporation (NYSE:HRL).
What does the smart money think about Hormel Foods Corporation (NYSE:HRL)?
Heading into 2013, a total of 7 of the hedge funds we track were long in this stock, a change of -36% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Chuck Royce’s Royce & Associates had the biggest position in Hormel Foods Corporation (NYSE:HRL), worth close to $24.8 million, comprising 0.1% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $19.5 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include David Harding’s Winton Capital Management, Tom Russo’s Gardner Russo & Gardner and Ken Griffin’s Citadel Investment Group.
Since Hormel Foods Corporation (NYSE:HRL) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there exists a select few money managers that elected to cut their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dropped the largest position of the “upper crust” of funds we monitor, worth about $0.7 million in stock.. Jim Simons’s fund, Renaissance Technologies, also dropped its stock, about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.
How are insiders trading Hormel Foods Corporation (NYSE:HRL)?
Insider buying is best served when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, Hormel Foods Corporation (NYSE:HRL) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Hormel Foods Corporation (NYSE:HRL). These stocks are Seaboard Corporation (NYSEAMEX:SEB), Smithfield Foods, Inc. (NYSE:SFD), BRF Brasil Foods SA (ADR) (NYSE:BRFS), Leucadia National Corp. (NYSE:LUK), and Tyson Foods, Inc. (NYSE:TSN). This group of stocks belong to the meat products industry and their market caps are similar to HRL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Seaboard Corporation (NYSEAMEX:SEB) | 3 | 0 | 0 |
| Smithfield Foods, Inc. (NYSE:SFD) | 24 | 0 | 2 |
| BRF Brasil Foods SA (ADR) (NYSE:BRFS) | 4 | 0 | 0 |
| Leucadia National Corp. (NYSE:LUK) | 26 | 0 | 0 |
| Tyson Foods, Inc. (NYSE:TSN) | 25 | 1 | 5 |
With the results exhibited by the aforementioned strategies, retail investors must always monitor hedge fund and insider trading activity, and Hormel Foods Corporation (NYSE:HRL) is no exception.
