While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Whole Earth Brands, Inc. (NASDAQ:FREE).
Is Whole Earth Brands, Inc. (NASDAQ:FREE) a cheap investment now? Investors who are in the know were getting more optimistic. The number of bullish hedge fund positions improved by 1 recently. Whole Earth Brands, Inc. (NASDAQ:FREE) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FREE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s view the key hedge fund action regarding Whole Earth Brands, Inc. (NASDAQ:FREE).
Do Hedge Funds Think FREE Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in FREE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Whole Earth Brands, Inc. (NASDAQ:FREE) was held by Rubric Capital Management, which reported holding $29.9 million worth of stock at the end of December. It was followed by Armistice Capital with a $15.6 million position. Other investors bullish on the company included SCW Capital Management, Corsair Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Whole Earth Brands, Inc. (NASDAQ:FREE), around 9.74% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, designating 3.95 percent of its 13F equity portfolio to FREE.
As industrywide interest jumped, some big names have jumped into Whole Earth Brands, Inc. (NASDAQ:FREE) headfirst. Corsair Capital Management, managed by Jay Petschek and Steven Major, initiated the largest position in Whole Earth Brands, Inc. (NASDAQ:FREE). Corsair Capital Management had $11.4 million invested in the company at the end of the quarter. Mario Cibelli’s Marathon Partners also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new FREE investors: Richard Driehaus’s Driehaus Capital, Parvinder Thiara’s Athanor Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Whole Earth Brands, Inc. (NASDAQ:FREE) but similarly valued. These stocks are Urstadt Biddle Properties Inc (NYSE:UBA), VSE Corporation (NASDAQ:VSEC), Digimarc Corp (NASDAQ:DMRC), SIGA Technologies Inc. (NASDAQ:SIGA), Ituran Location and Control Ltd. (NASDAQ:ITRN), Navigator Holdings Ltd (NYSE:NVGS), and Venator Materials PLC (NYSE:VNTR). This group of stocks’ market caps are similar to FREE’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 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $123 million in FREE’s case. Navigator Holdings Ltd (NYSE:NVGS) is the most popular stock in this table. On the other hand VSE Corporation (NASDAQ:VSEC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Whole Earth Brands, Inc. (NASDAQ:FREE) is more popular among hedge funds. Our overall hedge fund sentiment score for FREE is 86. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately FREE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FREE were disappointed as the stock returned -1.6% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.