The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded TreeHouse Foods Inc. (NYSE:THS) based on those filings.
Is TreeHouse Foods Inc. (NYSE:THS) going to take off soon? Money managers are turning a tiny bit bullish on the margin. The number of bullish hedge fund positions went up by 1 lately. Our calculations also showed that THS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Managemnet
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the new hedge fund action surrounding TreeHouse Foods Inc. (NYSE:THS).
What does smart money think about TreeHouse Foods Inc. (NYSE:THS)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards THS over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Levin Easterly Partners held the most valuable stake in TreeHouse Foods Inc. (NYSE:THS), which was worth $146.9 million at the end of the third quarter. On the second spot was Millennium Management which amassed $18.5 million worth of shares. DSAM Partners, AQR Capital Management, and Balyasny Asset Management 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 Levin Easterly Partners allocated the biggest weight to TreeHouse Foods Inc. (NYSE:THS), around 4.13% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, setting aside 3.23 percent of its 13F equity portfolio to THS.
As industrywide interest jumped, key hedge funds were breaking ground themselves. DSAM Partners, managed by Guy Shahar, assembled the largest position in TreeHouse Foods Inc. (NYSE:THS). DSAM Partners had $17.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new THS investors: Brandon Haley’s Holocene Advisors and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks similar to TreeHouse Foods Inc. (NYSE:THS). We will take a look at Kennedy-Wilson Holdings Inc (NYSE:KW), Thor Industries, Inc. (NYSE:THO), Cirrus Logic, Inc. (NASDAQ:CRUS), and Liberty Latin America Ltd. (NASDAQ:LILA). This group of stocks’ market values match THS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KW | 18 | 499215 | 5 |
| THO | 24 | 222357 | 5 |
| CRUS | 24 | 373257 | 1 |
| LILA | 13 | 154267 | 2 |
| Average | 19.75 | 312274 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $312 million. That figure was $242 million in THS’s case. Thor Industries, Inc. (NYSE:THO) is the most popular stock in this table. On the other hand Liberty Latin America Ltd. (NASDAQ:LILA) is the least popular one with only 13 bullish hedge fund positions. TreeHouse Foods Inc. (NYSE:THS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately THS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); THS investors were disappointed as the stock returned -11.8% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
