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Pilgrim’s Pride Corporation (PPC): Are Hedge Funds Right About This Stock?: Tyson Foods, Inc. (TSN), Leucadia National Corp. (LUK)

Pilgrim’s Pride Corporation (NASDAQ:PPC) was in 13 hedge funds’ portfolio at the end of December. PPC has seen an increase in activity from the world’s largest hedge funds of late. There were 8 hedge funds in our database with PPC positions at the end of the previous quarter.

Pilgrim's Pride Corporation (NASDAQ:PPC)

If you’d ask most traders, hedge funds are seen as worthless, old investment tools of yesteryear. While there are more than 8000 funds with their doors open today, we choose to focus on the masters of this group, close to 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by paying attention to their best equity investments, we have spotted a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as beneficial, bullish insider trading activity is another way to break down the world of equities. Obviously, there are a number of incentives for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this tactic if you know where to look (learn more here).

With these “truths” under our belt, let’s take a gander at the latest action encompassing Pilgrim’s Pride Corporation (NASDAQ:PPC).

What have hedge funds been doing with Pilgrim’s Pride Corporation (NASDAQ:PPC)?

Heading into 2013, a total of 13 of the hedge funds we track held long positions in this stock, a change of 63% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Cliff Asness’s AQR Capital Management had the largest position in Pilgrim’s Pride Corporation (NASDAQ:PPC), worth close to $3 million, comprising 0% of its total 13F portfolio. The second largest stake is held by Alexander Mitchell of Scopus Asset Management, with a $3 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Nelson Obus’s Wynnefield Capital, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

As aggregate interest increased, specific money managers were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, assembled the most valuable position in Pilgrim’s Pride Corporation (NASDAQ:PPC). Scopus Asset Management had 3 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $1 million investment in the stock during the quarter. The following funds were also among the new PPC investors: John Bader’s Halcyon Asset Management, Steven Cohen’s SAC Capital Advisors, and D. E. Shaw’s D E Shaw.

What do corporate executives and insiders think about Pilgrim’s Pride Corporation (NASDAQ:PPC)?

Insider buying is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, Pilgrim’s Pride Corporation (NASDAQ:PPC) has experienced 4 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Pilgrim’s Pride Corporation (NASDAQ:PPC). These stocks are Tyson Foods, Inc. (NYSE:TSN), Leucadia National Corp. (NYSE:LUK), Smithfield Foods, Inc. (NYSE:SFD), Industrias Bachoco, S.A.B. de C.V. (ADR) (NYSE:IBA), and Seaboard Corporation (NYSEAMEX:SEB). All of these stocks are in the meat products industry and their market caps are similar to PPC’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Tyson Foods, Inc. (NYSE:TSN) 25 1 6
Leucadia National Corp. (NYSE:LUK) 26 0 0
Smithfield Foods, Inc. (NYSE:SFD) 24 1 2
Industrias Bachoco, S.A.B. de C.V. (ADR) (NYSE:IBA) 2 0 0
Seaboard Corporation (NYSEAMEX:SEB) 3 0 0

With the returns exhibited by our time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and Pilgrim’s Pride Corporation (NASDAQ:PPC) is no exception.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.