Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Post Holdings Inc (NYSE:POST) based on that data.
Is POST a good stock to buy? Post Holdings Inc (NYSE:POST) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. POST shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 34 hedge funds in our database with POST holdings at the end of June. Our calculations also showed that POST isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. 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 website. Keeping this in mind we’re going to take a peek at the latest hedge fund action regarding Post Holdings Inc (NYSE:POST).
Do Hedge Funds Think POST Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in POST over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, William Duhamel’s Route One Investment Company has the biggest position in Post Holdings Inc (NYSE:POST), worth close to $602 million, corresponding to 15.8% of its total 13F portfolio. The second largest stake is held by Iridian Asset Management, led by David Cohen and Harold Levy, holding a $190 million position; 4.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions comprise Ric Dillon’s Diamond Hill Capital, Jack Woodruff’s Candlestick Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Route One Investment Company allocated the biggest weight to Post Holdings Inc (NYSE:POST), around 15.8% of its 13F portfolio. Inherent Group is also relatively very bullish on the stock, dishing out 5.99 percent of its 13F equity portfolio to POST.
Since Post Holdings Inc (NYSE:POST) has witnessed declining sentiment from the smart money, logic holds that there lies a certain “tier” of hedgies that elected to cut their full holdings last quarter. It’s worth mentioning that James Dinan’s York Capital Management dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $12.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $1.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Post Holdings Inc (NYSE:POST) but similarly valued. We will take a look at Tenaris S.A. (NYSE:TS), Aluminum Corp. of China Limited (NYSE:ACH), Ares Management Corp (NYSE:ARES), Polaris Inc. (NYSE:PII), Stericycle Inc (NASDAQ:SRCL), Axon Enterprise, Inc. (NASDAQ:AAXN), and Columbia Sportswear Company (NASDAQ:COLM). This group of stocks’ market valuations are closest to POST’s market valuation.
|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 21 hedge funds with bullish positions and the average amount invested in these stocks was $351 million. That figure was $1309 million in POST’s case. Polaris Inc. (NYSE:PII) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 4 bullish hedge fund positions. Post Holdings Inc (NYSE:POST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for POST is 58.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on POST as the stock returned 15% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.