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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Beyond Meat, Inc. (NASDAQ:BYND) and determine whether the smart money was really smart about this stock.
Beyond Meat, Inc. (NASDAQ:BYND) was in 29 hedge funds’ portfolios at the end of June. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BYND investors should be aware of an increase in enthusiasm from smart money recently. There were 13 hedge funds in our database with BYND holdings at the end of March. Our calculations also showed that BYND isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the latest hedge fund action surrounding Beyond Meat, Inc. (NASDAQ:BYND).
How are hedge funds trading Beyond Meat, Inc. (NASDAQ:BYND)?
At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 123% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BYND over the last 20 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Beyond Meat, Inc. (NASDAQ:BYND) was held by Citadel Investment Group, which reported holding $136.6 million worth of stock at the end of September. It was followed by PEAK6 Capital Management with a $72 million position. Other investors bullish on the company included Citadel Investment Group, Keywise Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Keywise Capital Management allocated the biggest weight to Beyond Meat, Inc. (NASDAQ:BYND), around 16% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, setting aside 2.02 percent of its 13F equity portfolio to BYND.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Keywise Capital Management, managed by Fang Zheng, created the most valuable position in Beyond Meat, Inc. (NASDAQ:BYND). Keywise Capital Management had $64 million invested in the company at the end of the quarter. Nancy Zevenbergen’s Zevenbergen Capital Investments also initiated a $42.5 million position during the quarter. The following funds were also among the new BYND investors: Noam Gottesman’s GLG Partners, Kenneth Tropin’s Graham Capital Management, and Anna Nikolayevsky’s Axel Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Beyond Meat, Inc. (NASDAQ:BYND) but similarly valued. These stocks are Henry Schein, Inc. (NASDAQ:HSIC), Ciena Corporation (NYSE:CIEN), Chegg Inc (NYSE:CHGG), Mylan N.V. (NASDAQ:MYL), Gold Fields Limited (NYSE:GFI), Caesars Entertainment, Inc. (NASDAQ:CZR), and MGM Resorts International (NYSE:MGM). This group of stocks’ market values match BYND’s market value.
|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 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1363 million. That figure was $254 million in BYND’s case. Caesars Entertainment, Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 15 bullish hedge fund positions. Beyond Meat, Inc. (NASDAQ:BYND) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BYND is 60. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately BYND wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BYND investors were disappointed as the stock returned 6.9% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.