Tyson Foods Inc. has been drawing interest from hedge-fund investors recently with a fund in Denver purchasing about $1.4 million in company shares.
Tyson's share price dipped 4 percent after the company released its third-quarter earnings report on Aug. 7. A few days later, several hedge funds took a stronger stake in the Springdale-based company, according to recent Securities and Exchange Commission filings.
Shelton Capital Management, a Denver institutional investor, purchased 22,328 Tyson shares valued at roughly $1.4 million.
After reportedly owning only 10 Tyson shares, Sun Life Financial Inc. in Canada purchased 2,100 shares, increasing its ownership to 2,110 shares valued at $132,000.
Washington Trust Bank increased its stake by 60 percent after buying 840 shares during the same period.
Also Independent Portfolio Consultants Inc. filed ownership of 2,282 Tyson shares valued at $143,000 after purchasing 1,357.
Despite the recent interest, the percentage of Tyson shares owned by hedge funds remains low, analysts said.
Over a two-year period, the percentage of Tyson's holdings held by hedge funds has declined about 10 percent, said Ken Shea, senior food and beverage analyst at Bloomberg.
Today, hedge-fund ownership of Tyson Foods sits at 6 percent, according to Bloomberg data.
Traditionally, hedge funds invest in growing businesses, not public companies, a Little Rock analyst said.
It seems that some hedge funds are investing because they see room for growth, said Bob Williams, senior vice president of Simmons First Investment Group.
"Finding value is getting tougher and tougher when [funds] have to reach out to public companies to deploy their capital," Williams said.
Tyson's trajectory to become more of a food-products company than a meat company has investors and analysts hopeful of the company's current leadership.
Strong demand across all of Tyson's business segments indicate good performance for fiscal 2018 -- particularly in chicken and fresh-meat segments -- said Tom Hayes, Tyson's president and chief executive officer, during a conference call Sept. 29.
"This is a time for transformation at Tyson Foods as we continue to grow our business," Hayes said.
Part of the company's potential for growth was attributed to a proposed chicken complex that Tyson wanted to build in Tonganoxie, Kan., by mid-2019. Tyson's plans for the facility remain on hold but the company is still on schedule to open a new production facility by 2019, according to Hayes.
Tyson shares also jumped after it announced Sept. 28 that it was eliminating about 450 corporate-level jobs in Springdale, Chicago and Cincinnati.
Tyson Foods also raised its earnings guidance to $5.20 to $5.30 a share, up from $4.95 to $5.05 a share. The company attributed unexpected beef performance to the guidance increase.
Tyson shares fell 41 cents, or less than 1 percent, to close Friday at $70.66.
Business on 10/07/2017
Print Headline: Hedge funds boost stakes in Tyson