Is US Foods Holding Corp (USFD) A Good Stock To Buy?

Since US Foods Holding Corp (NYSE:USFD) has sustained a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of funds who sold off their full holdings in the third quarter. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management dumped the biggest position of all the investors studied by Insider Monkey, totaling close to $31.5 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $22 million worth.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as US Foods Holding Corp (NYSE:USFD) but similarly valued. These stocks are W.R. Grace & Co. (NYSE:GRA), WellCare Health Plans, Inc. (NYSE:WCG), PacWest Bancorp (NASDAQ:PACW), and American Homes 4 Rent (NYSE:AMH). This group of stocks’ market caps resemble USFD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRA 39 1326561 -8
WCG 31 649423 1
PACW 16 258681 1
AMH 19 648142 5

As you can see these stocks had an average of 26 funds with bullish positions and the average amount invested in these stocks was $721 million, versus $502 million in USFD’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand PacWest Bancorp (NASDAQ:PACW) is the least popular one with only 16 bullish hedge fund positions. US Foods Holding Corp (NYSE:USFD) 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. In this regard W.R. Grace & Co. (NYSE:GRA)  might be a better candidate to consider taking a long position in.

Disclosure: none