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Did Hedge Funds Drop The Ball On Campbell Soup Company (CPB) ?

Is Campbell Soup Company (NYSE:CPB) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Campbell Soup Company (NYSE:CPB) was in 26 hedge funds’ portfolios at the end of the second quarter of 2019. CPB has experienced a decrease in hedge fund interest in recent months. There were 28 hedge funds in our database with CPB positions at the end of the previous quarter. Our calculations also showed that CPB isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are plenty of tools shareholders use to grade publicly traded companies. Two of the most innovative tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best money managers can beat the S&P 500 by a solid margin (see the details here).

CPB_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the fresh hedge fund action surrounding Campbell Soup Company (NYSE:CPB).

How are hedge funds trading Campbell Soup Company (NYSE:CPB)?

At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the first quarter of 2019. On the other hand, there were a total of 26 hedge funds with a bullish position in CPB a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Dan Loeb THIRD POINT

The largest stake in Campbell Soup Company (NYSE:CPB) was held by Third Point, which reported holding $741.3 million worth of stock at the end of March. It was followed by D E Shaw with a $34.3 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and GAMCO Investors.

Since Campbell Soup Company (NYSE:CPB) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers who sold off their entire stakes last quarter. Intriguingly, Steven Boyd’s Armistice Capital said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, comprising close to $22.9 million in stock. Guy Shahar’s fund, DSAM Partners, also dumped its stock, about $13.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Campbell Soup Company (NYSE:CPB) but similarly valued. We will take a look at W.R. Berkley Corporation (NYSE:WRB), NVR, Inc. (NYSE:NVR), Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR), and BanColombia S.A. (NYSE:CIB). All of these stocks’ market caps resemble CPB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WRB 23 319842 5
NVR 27 971715 2
EBR 6 23900 -2
CIB 10 159266 -1
Average 16.5 368681 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was $953 million in CPB’s case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras S.A. – Eletrobras (NYSE:EBR) is the least popular one with only 6 bullish hedge fund positions. Campbell Soup Company (NYSE:CPB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CPB as the stock returned 18.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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