The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Simpson Manufacturing Co, Inc. (NYSE:SSD) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Simpson Manufacturing Co, Inc. (NYSE:SSD) has experienced a decrease in activity from the world's largest hedge funds of late. Simpson Manufacturing Co, Inc. (NYSE:SSD) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistics is 26. Our calculations also showed that SSD isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we're going to take a glance at the recent hedge fund action surrounding Simpson Manufacturing Co, Inc. (NYSE:SSD).
How are hedge funds trading Simpson Manufacturing Co, Inc. (NYSE:SSD)?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SSD over the last 20 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Ariel Investments held the most valuable stake in Simpson Manufacturing Co, Inc. (NYSE:SSD), which was worth $60.2 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $40.5 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and Fisher Asset Management 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 Ariel Investments allocated the biggest weight to Simpson Manufacturing Co, Inc. (NYSE:SSD), around 0.92% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.51 percent of its 13F equity portfolio to SSD.
Because Simpson Manufacturing Co, Inc. (NYSE:SSD) has faced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of funds that slashed their full holdings in the second quarter. At the top of the heap, Phill Gross and Robert Atchinson's Adage Capital Management cut the largest stake of the 750 funds followed by Insider Monkey, worth close to $6.4 million in stock. Richard Driehaus's fund, Driehaus Capital, also cut its stock, about $2.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds in the second quarter.
Let's now review hedge fund activity in other stocks similar to Simpson Manufacturing Co, Inc. (NYSE:SSD). We will take a look at Alamos Gold Inc (NYSE:AGI), DouYu International Holdings Limited (NASDAQ:DOYU), Momo Inc (NASDAQ:MOMO), Cogent Communications Holdings Inc. (NASDAQ:CCOI), Parsons Corporation (NYSE:PSN), Texas Roadhouse Inc (NASDAQ:TXRH), and Harley-Davidson, Inc. (NYSE:HOG). All of these stocks' market caps are similar to SSD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGI,16,399028,-3 DOYU,15,77638,0 MOMO,34,586169,9 CCOI,28,464857,1 PSN,15,81243,0 TXRH,25,233801,-2 HOG,30,392806,13 Average,23.3,319363,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $200 million in SSD's case. Momo Inc (NASDAQ:MOMO) is the most popular stock in this table. On the other hand DouYu International Holdings Limited (NASDAQ:DOYU) is the least popular one with only 15 bullish hedge fund positions. Simpson Manufacturing Co, Inc. (NYSE:SSD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SSD is 40. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on SSD as the stock returned 15.8% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.