Hedge Funds Never Been Less Bullish On Tyson Foods, Inc. (TSN)

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Tyson Foods, Inc. (NYSE:TSN).

Tyson Foods, Inc. (NYSE:TSN) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 58. TSN investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 38 hedge funds in our database with TSN holdings at the end of December. Our calculations also showed that TSN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Donald Yacktman of Yacktman Asset ManagementDonald Yacktman

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind let’s analyze the latest hedge fund action regarding Tyson Foods, Inc. (NYSE:TSN).

Do Hedge Funds Think TSN Is A Good Stock To Buy Now?

At first quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the fourth quarter of 2020. By comparison, 41 hedge funds held shares or bullish call options in TSN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TSN A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Yacktman Asset Management, managed by Donald Yacktman, holds the largest position in Tyson Foods, Inc. (NYSE:TSN). Yacktman Asset Management has a $202.9 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $177.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that hold long positions encompass John Overdeck and David Siegel’s Two Sigma Advisors, Noam Gottesman’s GLG Partners and Bernard Horn’s Polaris Capital Management. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to Tyson Foods, Inc. (NYSE:TSN), around 2.12% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 1.91 percent of its 13F equity portfolio to TSN.

Seeing as Tyson Foods, Inc. (NYSE:TSN) has experienced declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their entire stakes heading into Q2. Interestingly, Peter Simmie’s Bristol Gate Capital Partners said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $62.4 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $20.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 10 funds heading into Q2.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tyson Foods, Inc. (NYSE:TSN) but similarly valued. These stocks are RingCentral Inc (NYSE:RNG), Mettler-Toledo International Inc. (NYSE:MTD), Ferguson plc (NYSE:FERG), Dollar Tree, Inc. (NASDAQ:DLTR), Equity Residential (NYSE:EQR), Keysight Technologies Inc (NYSE:KEYS), and Fifth Third Bancorp (NASDAQ:FITB). This group of stocks’ market values match TSN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RNG 51 3249906 -12
MTD 27 1040369 -2
FERG 5 1642726 5
DLTR 41 1686679 -12
EQR 23 359416 -5
KEYS 32 529652 5
FITB 38 401275 -5
Average 31 1272860 -3.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1273 million. That figure was $762 million in TSN’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand Ferguson plc (NYSE:FERG) is the least popular one with only 5 bullish hedge fund positions. Tyson Foods, Inc. (NYSE:TSN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TSN is 34.5. 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 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 surpassed the market again by 6.7 percentage points. Unfortunately TSN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TSN investors were disappointed as the stock returned -0.5% since the end of March (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 in 2021.

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