We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Conagra Brands, Inc. (NYSE:CAG).
Conagra Brands, Inc. (NYSE:CAG) was in 29 hedge funds’ portfolios at the end of December. CAG investors should pay attention to a decrease in hedge fund interest lately. There were 31 hedge funds in our database with CAG positions at the end of the previous quarter. Our calculations also showed that CAG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
In today’s marketplace there are dozens of formulas market participants can use to value stocks. Two of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a solid amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the recent hedge fund action surrounding Conagra Brands, Inc. (NYSE:CAG).
Hedge fund activity in Conagra Brands, Inc. (NYSE:CAG)
Heading into the first quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CAG over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, JANA Partners, managed by Barry Rosenstein, holds the biggest position in Conagra Brands, Inc. (NYSE:CAG). JANA Partners has a $512.3 million position in the stock, comprising 42.7% of its 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, managed by Mario Gabelli, which holds a $66.3 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions comprise Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to Conagra Brands, Inc. (NYSE:CAG), around 42.66% of its 13F portfolio. Element Capital Management is also relatively very bullish on the stock, setting aside 2.12 percent of its 13F equity portfolio to CAG.
Since Conagra Brands, Inc. (NYSE:CAG) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of fund managers who sold off their entire stakes in the third quarter. Intriguingly, Renaissance Technologies sold off the largest stake of the 750 funds followed by Insider Monkey, comprising close to $11.3 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $6.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Conagra Brands, Inc. (NYSE:CAG). We will take a look at Maxim Integrated Products Inc. (NASDAQ:MXIM), WellCare Health Plans, Inc. (NYSE:WCG), Regions Financial Corporation (NYSE:RF), and Enel Americas S.A. (NYSE:ENIA). All of these stocks’ market caps match CAG’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $844 million. That figure was $741 million in CAG’s case. WellCare Health Plans, Inc. (NYSE:WCG) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 8 bullish hedge fund positions. Conagra Brands, Inc. (NYSE:CAG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on CAG as the stock returned -20% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.