Lamb Weston Holdings, Inc. (LW): Are Hedge Funds Right About This Stock?

Is Lamb Weston Holdings, Inc. (NYSE:LW) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Lamb Weston Holdings, Inc. (NYSE:LW) has experienced an increase in support from the world’s most elite money managers recently. Lamb Weston Holdings, Inc. (NYSE:LW) was in 38 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 42. Our calculations also showed that LW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are a large number of indicators stock market investors employ to analyze stocks. Two of the most useful indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top fund managers can trounce the S&P 500 by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a glance at the new hedge fund action surrounding Lamb Weston Holdings, Inc. (NYSE:LW).

Do Hedge Funds Think LW Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the fourth quarter of 2020. On the other hand, there were a total of 29 hedge funds with a bullish position in LW a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Candlestick Capital Management was the largest shareholder of Lamb Weston Holdings, Inc. (NYSE:LW), with a stake worth $93 million reported as of the end of March. Trailing Candlestick Capital Management was BlueDrive Global Investors, which amassed a stake valued at $66.7 million. Millennium Management, Balyasny Asset Management, and Citadel Investment Group 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 BlueDrive Global Investors allocated the biggest weight to Lamb Weston Holdings, Inc. (NYSE:LW), around 10.81% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 3.91 percent of its 13F equity portfolio to LW.

Now, key money managers were leading the bulls’ herd. Armistice Capital, managed by Steven Boyd, initiated the most valuable position in Lamb Weston Holdings, Inc. (NYSE:LW). Armistice Capital had $21.5 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $10.6 million position during the quarter. The following funds were also among the new LW investors: Peter Avellone’s Cartenna Capital, James Dinan’s York Capital Management, and Jinghua Yan’s TwinBeech Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lamb Weston Holdings, Inc. (NYSE:LW) but similarly valued. We will take a look at IPG Photonics Corporation (NASDAQ:IPGP), Bausch Health Companies Inc. (NYSE:BHC), Qiagen NV (NYSE:QGEN), Globe Life Inc. (NYSE:GL), Bunge Limited (NYSE:BG), The Gap Inc. (NYSE:GPS), and Universal Display Corporation (NASDAQ:OLED). This group of stocks’ market valuations are similar to LW’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $1091 million. That figure was $493 million in LW’s case. Bunge Limited (NYSE:BG) is the most popular stock in this table. On the other hand Universal Display Corporation (NASDAQ:OLED) is the least popular one with only 17 bullish hedge fund positions. Lamb Weston Holdings, Inc. (NYSE:LW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LW is 76. 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 positive signal but 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately LW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LW were disappointed as the stock returned 4.4% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.