Top Performing Fund Goes Short On Sanderson Farms, Inc. (SAFM)

Wolf Hill Capital is bearish on Sanderson Farms, Inc. (Nasdaq: SAFM), the third-largest domestic poultry producer in the United States. The top-performing fund believes that SAFM and other chicken processors are “over-earning based on unsustainably high processing margins that are poised to mean-revert over the course of the next two years as industry capacity ramps up.” According to Wolf Hill, the fair value for the company’s stock is $72 per share. SAFM is currently trading at around $126 and has a consensus average rating of Underweight from analysts polled by FactSet. In its Q4 investor letter, Wolf Hill discussed SAFM and other companies – we have already covered Archrock Partners and Constellium. In this article, we’ll take a look at comments made by the fund about Sanderson Farms in the letter.