In this article we are going to use hedge fund sentiment as a tool and determine whether Conagra Brands, Inc. (NYSE:CAG) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is CAG a good stock to buy? Conagra Brands, Inc. (NYSE:CAG) has experienced an increase in hedge fund interest in recent months. Conagra Brands, Inc. (NYSE:CAG) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that CAG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think CAG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CAG over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Barry Rosenstein’s JANA Partners has the most valuable position in Conagra Brands, Inc. (NYSE:CAG), worth close to $408.3 million, amounting to 27.5% of its total 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $106.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and Ray Dalio’s Bridgewater Associates. In terms of the portfolio weights assigned to each position JANA Partners allocated the biggest weight to Conagra Brands, Inc. (NYSE:CAG), around 27.53% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to CAG.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Navellier & Associates, managed by Louis Navellier, created the most outsized position in Conagra Brands, Inc. (NYSE:CAG). Navellier & Associates had $2.3 million invested in the company at the end of the quarter. Peter Algert’s Algert Global also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Donald Sussman’s Paloma Partners, and Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks similar to Conagra Brands, Inc. (NYSE:CAG). We will take a look at United Airlines Holdings Inc (NYSE:UAL), Cheniere Energy, Inc. (NYSE:LNG), Amcor plc (NYSE:AMCR), Caesars Entertainment Inc. (NASDAQ:CZR), Affirm Holdings, Inc. (NASDAQ:AFRM), Expeditors International of Washington (NASDAQ:EXPD), and Rogers Communications Inc. (NYSE:RCI). This group of stocks’ market values are closest to CAG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UAL | 38 | 1024160 | -14 |
| LNG | 40 | 2549760 | 2 |
| AMCR | 17 | 226541 | -2 |
| CZR | 76 | 1520267 | 5 |
| AFRM | 32 | 582516 | 32 |
| EXPD | 21 | 440396 | -4 |
| RCI | 18 | 289168 | 3 |
| Average | 34.6 | 947544 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $948 million. That figure was $700 million in CAG’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Amcor plc (NYSE:AMCR) is the least popular one with only 17 bullish hedge fund positions. Conagra Brands, Inc. (NYSE:CAG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CAG is 36. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately CAG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CAG investors were disappointed as the stock returned -3.9% since the end of March (through 7/2) 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.
