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Should I Buy The Hain Celestial Group, Inc. (HAIN)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought The Hain Celestial Group, Inc. (NASDAQ:HAIN) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

The Hain Celestial Group, Inc. (NASDAQ:HAIN) has seen an increase in enthusiasm from smart money recently. The Hain Celestial Group, Inc. (NASDAQ:HAIN) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistics is 35. There were 20 hedge funds in our database with HAIN holdings at the end of March. Our calculations also showed that HAIN isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the latest hedge fund action surrounding The Hain Celestial Group, Inc. (NASDAQ:HAIN).

Hedge fund activity in The Hain Celestial Group, Inc. (NASDAQ:HAIN)

At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in HAIN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in The Hain Celestial Group, Inc. (NASDAQ:HAIN) was held by Engaged Capital, which reported holding $504.1 million worth of stock at the end of September. It was followed by Soros Fund Management with a $138.4 million position. Other investors bullish on the company included Paradice Investment Management, GAMCO Investors, and Greenhouse Funds. In terms of the portfolio weights assigned to each position Engaged Capital allocated the biggest weight to The Hain Celestial Group, Inc. (NASDAQ:HAIN), around 54.31% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 4.81 percent of its 13F equity portfolio to HAIN.

As aggregate interest increased, key money managers were leading the bulls’ herd. Soros Fund Management, managed by George Soros, established the largest position in The Hain Celestial Group, Inc. (NASDAQ:HAIN). Soros Fund Management had $138.4 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $4 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Donald Sussman’s Paloma Partners, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks similar to The Hain Celestial Group, Inc. (NASDAQ:HAIN). These stocks are KBR, Inc. (NYSE:KBR), BRF SA (NYSE:BRFS), Box, Inc. (NYSE:BOX), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), nVent Electric plc (NYSE:NVT), Coherent, Inc. (NASDAQ:COHR), and Valley National Bancorp (NASDAQ:VLY). All of these stocks’ market caps resemble HAIN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KBR 35 604967 7
BRFS 16 45626 2
BOX 33 655973 -1
PNFP 14 32187 1
NVT 27 428424 -2
COHR 32 208020 9
VLY 17 25863 -5
Average 24.9 285866 1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $829 million in HAIN’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is the least popular one with only 14 bullish hedge fund positions. The Hain Celestial Group, Inc. (NASDAQ:HAIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HAIN is 53.4. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately HAIN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HAIN investors were disappointed as the stock returned 5.3% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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