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2019 Review: Most Favored Hedge Fund Stocks vs. Tyson Foods, Inc. (TSN)

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Tyson Foods, Inc. (NYSE:TSN).

Is Tyson Foods, Inc. (NYSE:TSN) undervalued? The smart money is betting on the stock. The number of long hedge fund bets improved by 9 in recent months. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the 21st century investor’s toolkit there are several formulas investors can use to grade publicly traded companies. A duo of the most innovative formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the broader indices by a significant margin (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s check out the key hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).

How are hedge funds trading Tyson Foods, Inc. (NYSE:TSN)?

At the end of the third quarter, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in TSN a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is TSN A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Tyson Foods, Inc. (NYSE:TSN). AQR Capital Management has a $477.8 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Iridian Asset Management, led by David Cohen and Harold Levy, holding a $203.9 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Ken Griffin’s Citadel Investment Group, Aaron Cowen’s Suvretta Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Passport Capital allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 13.24% of its 13F portfolio. Columbus Hill Capital Management is also relatively very bullish on the stock, setting aside 9.8 percent of its 13F equity portfolio to TSN.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in Tyson Foods, Inc. (NYSE:TSN). Point72 Asset Management had $55.4 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $34.5 million position during the quarter. The other funds with brand new TSN positions are Aaron Cowen’s Suvretta Capital Management, Robert Pohly’s Samlyn Capital, and Jacob Doft’s Highline Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tyson Foods, Inc. (NYSE:TSN) but similarly valued. We will take a look at Public Service Enterprise Group Incorporated (NYSE:PEG), Consolidated Edison, Inc. (NYSE:ED), TE Connectivity Ltd. (NYSE:TEL), and Newmont Mining Corp (NYSE:NEM). This group of stocks’ market values are similar to TSN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PEG 18 838718 -5
ED 22 1396380 -4
TEL 30 1265055 3
NEM 41 868131 0
Average 27.75 1092071 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1092 million. That figure was $1717 million in TSN’s case. Newmont Mining Corp (NYSE:NEM) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Tyson Foods, Inc. (NYSE:TSN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on TSN as the stock returned 75.3% so far in 2019 (through 12/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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