We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Post Holdings Inc (NYSE:POST) based on that data.
Is Post Holdings Inc (NYSE:POST) a safe investment right now? The smart money is in an optimistic mood. The number of bullish hedge fund positions moved up by 10 in recent months. Our calculations also showed that POST isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). POST was in 38 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with POST positions at the end of the previous quarter.
In the financial world there are many metrics market participants put to use to analyze their stock investments. A duo of the most under-the-radar metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the broader indices by a very impressive margin (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the latest hedge fund action surrounding Post Holdings Inc (NYSE:POST).
How are hedge funds trading Post Holdings Inc (NYSE:POST)?
At Q4’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in POST a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Route One Investment Company held the most valuable stake in Post Holdings Inc (NYSE:POST), which was worth $672.9 million at the end of the third quarter. On the second spot was Iridian Asset Management which amassed $221.2 million worth of shares. Diamond Hill Capital, Bridger Management, and GAMCO Investors 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 Route One Investment Company allocated the biggest weight to Post Holdings Inc (NYSE:POST), around 19.01% of its 13F portfolio. Freshford Capital Management is also relatively very bullish on the stock, earmarking 8.37 percent of its 13F equity portfolio to POST.
As one would reasonably expect, specific money managers have been driving this bullishness. Maverick Capital, managed by Lee Ainslie, created the largest position in Post Holdings Inc (NYSE:POST). Maverick Capital had $13 million invested in the company at the end of the quarter. Malcolm Levine’s Dendur Capital also initiated a $12.4 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Brian Scudieri’s Kehrs Ridge Capital, and Jack Woodruff’s Candlestick Capital Management.
Let’s check out hedge fund activity in other stocks similar to Post Holdings Inc (NYSE:POST). These stocks are Pentair plc (NYSE:PNR), ABIOMED, Inc. (NASDAQ:ABMD), Douglas Emmett, Inc. (NYSE:DEI), and Apartment Investment and Management Co. (NYSE:AIV). This group of stocks’ market values resemble POST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNR | 26 | 507381 | 1 |
| ABMD | 35 | 679670 | 11 |
| DEI | 19 | 631403 | -4 |
| AIV | 24 | 581817 | -4 |
| Average | 26 | 600068 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $600 million. That figure was $1515 million in POST’s case. ABIOMED, Inc. (NASDAQ:ABMD) is the most popular stock in this table. On the other hand Douglas Emmett, Inc. (NYSE:DEI) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Post Holdings Inc (NYSE:POST) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still managed to beat the market by 3.2 percentage points. Hedge funds were also right about betting on POST, though not to the same extent, as the stock returned -25.3% during the first quarter (through March 16th) and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
