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Were Hedge Funds Right About Piling Into Campbell Soup Company (CPB)?

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 first 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 4.5 years and analyze what the smart money thinks of Campbell Soup Company (NYSE:CPB) based on that data and determine whether they were really smart about the stock.

Is Campbell Soup Company (NYSE:CPB) a buy, sell, or hold? Investors who are in the know were taking an optimistic view. The number of long hedge fund positions went up by 11 in recent months. Our calculations also showed that CPB isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Joe Huber - Huber Capital Management

Joe Huber of Huber Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action surrounding Campbell Soup Company (NYSE:CPB).

What have hedge funds been doing with Campbell Soup Company (NYSE:CPB)?

Heading into the second quarter of 2020, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CPB over the last 18 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Campbell Soup Company (NYSE:CPB), with a stake worth $86 million reported as of the end of September. Trailing Renaissance Technologies was Holocene Advisors, which amassed a stake valued at $46.7 million. Citadel Investment Group, AQR Capital Management, and Armistice 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 GRT Capital Partners allocated the biggest weight to Campbell Soup Company (NYSE:CPB), around 3.32% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, setting aside 2.48 percent of its 13F equity portfolio to CPB.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Renaissance Technologies, established the most valuable position in Campbell Soup Company (NYSE:CPB). Renaissance Technologies had $86 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $22.1 million investment in the stock during the quarter. The following funds were also among the new CPB investors: Joe Huber’s Huber Capital Management, Steve Cohen’s Point72 Asset Management, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Campbell Soup Company (NYSE:CPB) but similarly valued. We will take a look at Trip.com Group Limited (NASDAQ:TCOM), Grifols SA (NASDAQ:GRFS), Genmab A/S (NASDAQ:GMAB), and Align Technology, Inc. (NASDAQ:ALGN). This group of stocks’ market valuations match CPB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TCOM 31 966859 0
GRFS 23 700219 2
GMAB 14 130319 2
ALGN 39 1396832 -1
Average 26.75 798557 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $799 million. That figure was $378 million in CPB’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Campbell Soup Company (NYSE:CPB) is more popular among hedge funds. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately CPB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CPB were disappointed as the stock returned 8.3% during the second quarter 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.