United Natural Foods, Inc. (UNFI): Hedge Funds Are Snapping Up

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on United Natural Foods, Inc. (NYSE:UNFI).

United Natural Foods, Inc. (NYSE:UNFI) has experienced an increase in enthusiasm from smart money lately. United Natural Foods, Inc. (NYSE:UNFI) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that UNFI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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 we’re going to review the fresh hedge fund action encompassing United Natural Foods, Inc. (NYSE:UNFI).

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

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in UNFI a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of United Natural Foods, Inc. (NYSE:UNFI), with a stake worth $32.4 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $16.8 million. Rima Senvest Management, Intrinsic Edge Capital, and Arrowstreet Capital 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 Prentice Capital Management allocated the biggest weight to United Natural Foods, Inc. (NYSE:UNFI), around 1.62% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.59 percent of its 13F equity portfolio to UNFI.

Now, key money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, initiated the most valuable position in United Natural Foods, Inc. (NYSE:UNFI). D E Shaw had $16.8 million invested in the company at the end of the quarter. Richard Mashaal’s Rima Senvest Management also made a $12.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Frank Fu’s CaaS Capital, Sander Gerber’s Hudson Bay Capital Management, and Raymond J. Harbert’s Harbert Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Natural Foods, Inc. (NYSE:UNFI) but similarly valued. We will take a look at Hercules Capital Inc (NYSE:HTGC), Osisko Gold Royalties Ltd (NYSE:OR), Embraer SA (NYSE:ERJ), Euronav NV (NYSE:EURN), Aurora Cannabis Inc. (NASDAQ:ACB), MFA Financial, Inc. (NYSE:MFA), and Capitol Federal Financial, Inc. (NASDAQ:CFFN). This group of stocks’ market values match UNFI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HTGC 10 30102 -2
OR 18 165245 2
ERJ 14 224549 3
EURN 17 93365 3
ACB 12 48845 2
MFA 16 104285 -6
CFFN 12 89757 2
Average 14.1 108021 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $103 million in UNFI’s case. Osisko Gold Royalties Ltd (NYSE:OR) is the most popular stock in this table. On the other hand Hercules Capital Inc (NYSE:HTGC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks United Natural Foods, Inc. (NYSE:UNFI) is more popular among hedge funds. Our overall hedge fund sentiment score for UNFI is 88.8. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately UNFI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UNFI were disappointed as the stock returned -3% since the end of the first quarter (through 7/16) 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 most of these stocks already outperformed the market since 2019.

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