Hershey stock (NYSE: HSY)
According to an analyst, the Hershey candy jet made an unusual trip to Omaha, Nebraska to sniff off deals from flight records.
Don Bilson, Gordon Haskett’s head of event-driven research, wrote in a note Thursday, “We got this from our jet tracking and what we noticed on June 12 was a trip that Hershey made to Omaha.” “We haven’t seen HSY make a trip like this in at least a year.”
It’s possible that a plane tracked as belonging to the Pennsylvania-based Hershey flew to the home of Warren Buffett’s Berkshire Hathaway by chance. The college baseball World Series is taking place in Omaha this June, and the United States Olympic swimming trials have just concluded there.
However, traders should be aware that Bilson is the same analyst who used jet data to uncover Berkshire Hathaway’s support for Occidental Petroleum’s Anadarko Petroleum deal. Bilson also used alternative data to forecast Carl Icahn’s move on HP.
“And it just so happens that [Hershey’s] Challenger 604 was in Omaha for a couple of days, which is more than enough time for anyone who made the trip to pay the Big Guy a visit,” Bilson added.
A deal of this nature, while purely speculative at this point, would not be out of character for Buffett. Berkshire Hathaway has owned See’s Candies for nearly five decades, and Buffett was also involved in the purchase of Wrigley Chewing Gum Company in 2008.
Buffett’s love of sweets has also been well documented over the years. He once famously told Fortune magazine, “I’m a quarter Coca-Cola,” claiming that he drank at least five 12-ounce servings of the beverage every day. Coca-Cola is still one of Berkshire Hathaway’s largest equity holdings, with $21 billion in shares.
“We do not comment on rumors and speculation about our business, including the movements of our aircraft,” a Hershey representative told analysts. According to a Berkshire Hathaway spokesperson, the company does not comment on such reports.
Hershey’s current market value is around $35 billion. Any transaction involving the candy company would require the approval of the Hershey Trust, which retains majority voting control of the stock.
Berkshire’s cash pile increased by about 5% during the quarter to more than $145.4 billion, just slightly less than the record level seen at the end of the third quarter last year.
Buffett has remained on the sidelines as the deal-making environment has become more competitive and market valuations have skyrocketed. In his most recent public comments, the legendary investor stated that he hasn’t seen anything compelling enough to pull the trigger on a large acquisition like he has in the past.
After learning that the Occidental Petroleum corporate jet had landed in Omaha in 2019, Bilson deduced that Occidental was receiving assistance from Buffett. Separately, before the news broke, he had been sounding the alarm that Icahn was a whale behind HP M&A activity through derivatives trading activities.
Hershey benefited from the pandemic’s stay-at-home trend, with shares rising 3.6 percent in 2020. The stock has risen more than 13% this year to a new high, as the company raised its sales and earnings forecasts for the year.
According to CEO Michele Buck, Hershey had one of its best Easters in history in April, as consumers cling to traditions and rituals during the pandemic, boosting sales of seasonal items. She anticipates that this year’s Halloween will follow a similar pattern.
On Thursday, Hershey’s stock rose 1%.
ARK Innovation began to suffer in late February, when the market experienced a dramatic shift from growth to value. Fears of higher interest rates caused by inflation, on the other hand, appear exaggerated, as the 10-year Treasury yields around 1.5 percent after peaking near 1.8 percent at the end of March.
With interest rates continuing to fall and the threat of inflation under control, investors are returning to their favorite growth names, and Wood’s Ark Invest is on the rise again.
Wood announced his return earlier this month. On June 8, she told clients that “the rotation back to growth is probably close at hand.”
According to Wood’s theory, consumer spending will shift significantly to the services sector after dominating the goods sector during the coronavirus pandemic. Wood predicted that this would lead to a drop in commodity prices and cyclical stocks, paving the way for outperformance in innovation names.
To be sure, the fund has a long way to go before breaking its February high. The ETF is down about 21% from its 52-week high.
ARK’s top holdings have a lot of power.
Wood, who is known for doubling down on her top holdings during volatile periods, has spent the last few volatile months doubling down on her top holdings. Wood, a long-time bitcoin bull, recently took advantage of weakness in DraftKings, Coinbase, and Grayscale Bitcoin Trust.
“We have capitalized on this volatility by selling names that have held up better than others and moving into names… that we have a high degree of conviction in and those that are more opportunistic,” she said this month during an ARK webinar. Wood told analysts last month that she now expects her top holdings to generate a 25% annual rate of return over the next five years.
Wood’s top holdings have bottomed out and led the ETF higher since April’s hot inflation report, which was released on May 12. Analysts organized the fund’s holdings based on market valuation and then screened to see how much the equities have gained since then.
As of Wednesday’s close, shares of Tesla, the fund’s largest holding, had risen roughly 15% since mid-May.
Teladoc Health and Shopify are up about 20% and 43%, respectively, since the bottom in May, as of Wednesday’s close. Since then, Square has increased by 21%, and Zoom Video has increased by 30%. Twilio and Unity Software are up 37% and 40%, respectively, since the bottom in May. DocuSign has increased by a whopping 52 percent in that time.
Wood made a name for herself following a successful 2020 in which ARK Innovation returned nearly 150 percent.
According to FactSet, ARK Innovation will receive approximately $7 billion in investor capital in 2021. Wood’s flagship fund has received $15 billion in fund flows over the last year.