The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtSYSCO Corporation (NYSE:SYY) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
SYSCO Corporation (NYSE:SYY) has experienced an increase in enthusiasm from smart money of late. Our calculations also showed that SYY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are many signals shareholders use to value publicly traded companies. A pair of the most underrated signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best investment managers can trounce their index-focused peers by a superb margin (see the details here).
Nelson Peltz of Trian Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action encompassing SYSCO Corporation (NYSE:SYY).
How have hedgies been trading SYSCO Corporation (NYSE:SYY)?
At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in SYY a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Trian Partners was the largest shareholder of SYSCO Corporation (NYSE:SYY), with a stake worth $1080.3 million reported as of the end of September. Trailing Trian Partners was Yacktman Asset Management, which amassed a stake valued at $281 million. AQR Capital Management, Alyeska Investment Group, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to SYSCO Corporation (NYSE:SYY), around 15.57% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, setting aside 4.66 percent of its 13F equity portfolio to SYY.
As industrywide interest jumped, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in SYSCO Corporation (NYSE:SYY). Citadel Investment Group had $41.2 million invested in the company at the end of the quarter. John Osterweis’s Osterweis Capital Management also initiated a $15.3 million position during the quarter. The other funds with brand new SYY positions are Malcolm Levine’s Dendur Capital, Christian Leone’s Luxor Capital Group, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SYSCO Corporation (NYSE:SYY) but similarly valued. We will take a look at Capital One Financial Corp. (NYSE:COF), Canon Inc. (NYSE:CAJ), Equity Residential (NYSE:EQR), and Square, Inc. (NYSE:SQ). This group of stocks’ market caps match SYY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COF | 50 | 1107098 | 0 |
| CAJ | 7 | 46934 | -1 |
| EQR | 24 | 175386 | -6 |
| SQ | 56 | 1609151 | 0 |
| Average | 34.25 | 734642 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $735 million. That figure was $1784 million in SYY’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 bullish hedge fund positions. SYSCO Corporation (NYSE:SYY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on SYY, though not to the same extent, as the stock returned 21.1% during the second quarter and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
