Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

These Stocks are Positioned for Long-Term Growth Despite Today’s Declines

Page 1 of 2

ConAgra Foods Inc (NYSE:CAG) and CarMax, Inc (NYSE:KMX) reported earnings on Tuesday. Although both companies beat EPS expectations, both stocks are down more than 5% in Tuesday trading session. Let’s take a closer look at the financial performance of these two companies and see whether hedge fund sentiment suggest that the market overreacted to a particular part of their results.


We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 118% since then and outperformed the S&P 500 Index by around 60 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

ConAgra Foods Inc (NYSE:CAG) reported first quarter 2016 diluted EPS of $0.45, up 15% year over year. Revenue was $2.79 billion, up 1.1% year over year. Gross margins increased by 3.7% year over year to 25.1%. ConAgra’s Commercial Foods segment revenue rose 3.5% year over year to $1.09 billion. Most importantly, the company classified its private label business as a ‘discontinued operation’ in preparation for a spin off or sale.

Follow Conagra Foods Inc (NYSE:CAG)
Trade (NYSE:CAG) Now!

Despite Tuesday’s drop, ConAgra Foods’ stock is up 10% year to date in large part due to hedge fund activism. In June, Barry Rosenstein‘s JANA Partners took a 7.2% stake and called for ConAgra to spin off its private label business and contain costs. ConAgra Foods Inc (NYSE:CAG)’s stock began rising immediately afterwards.  Overall, according to our database of around 730 funds, the total number hedge funds with long positions in ConAgra increased to 31 from 23 in the quarter prior. The total value of hedge fund holdings rose to $2.18 billion at the end of June, equal to 11.70% of the company, up from $462 million at the end of March. Among the hedge funds that established new positions in the second quarter were Eric Mandelblatt’s Soroban Capital Partners, which bought 2.28 million shares, and Kenneth Squire’s 13D Management, which purchased 275,000 shares. With an analyst target price of $45.20 per share and more stringent cost control measures, ConAgra Foods Inc (NYSE:CAG) has upside.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!