Like everyone else, successful investors make mistakes. Some of their top consensus picks, such as Valeant and SunEdison, have not done well during the last 12 months due to various reasons. Nevertheless, the data show successful investors’ consensus picks have done well on average. The top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters. S&P 500 Index returned only 7.6% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what successful funds and billionaire investors think before doing extensive research on a stock. In this article, we take a closer look at Whole Foods Market, Inc. (NASDAQ:WFM) from the perspective of those successful funds.
Whole Foods Market, Inc. (NASDAQ:WFM) was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. WFM investors should be aware of an increase in enthusiasm from smart money recently. There were 26 hedge funds in our database with WFM holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Foot Locker, Inc. (NYSE:FL), Sealed Air Corp (NYSE:SEE), and Ihs Markit Ltd. (NASDAQ:INFO) to gather more data points.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
How are hedge funds trading Whole Foods Market, Inc. (NASDAQ:WFM)?
Heading into the fourth quarter of 2016, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 8% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards WFM over the last 5 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the largest position in Whole Foods Market, Inc. (NASDAQ:WFM), worth close to $275.2 million, amounting to 2.4% of its total 13F portfolio. The second largest stake is held by Anand Parekh of Alyeska Investment Group, with a $123 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Ken Griffin’s Citadel Investment Group, Steve Cohen’s Point72 Asset Management and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.