The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about The Scotts Miracle-Gro Company (NYSE:SMG)?
The Scotts Miracle-Gro Company (NYSE:SMG) was in 28 hedge funds' portfolios at the end of March. SMG has seen a decrease in support from the world's most elite money managers recently. There were 31 hedge funds in our database with SMG holdings at the end of the previous quarter. Our calculations also showed that SMG 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.
To most stock holders, hedge funds are assumed to be slow, old financial vehicles of yesteryear. While there are over 8000 funds in operation at present, Our experts look at the top tier of this group, approximately 850 funds. These investment experts handle the majority of the hedge fund industry's total capital, and by keeping track of their matchless investments, Insider Monkey has identified various investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_193030" align="aligncenter" width="400"] Tom Gayner of Markel Gayner Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the new hedge fund action encompassing The Scotts Miracle-Gro Company (NYSE:SMG).
How have hedgies been trading The Scotts Miracle-Gro Company (NYSE:SMG)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in SMG over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in The Scotts Miracle-Gro Company (NYSE:SMG). Fisher Asset Management has a $108.3 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Hudson Executive Capital, led by Douglas Braunstein and James Woolery, holding a $29.9 million position; 3.8% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Mark Coe's Intrinsic Edge Capital, Ken Grossman and Glen Schneider's SG Capital Management and Jeremy Hosking's Hosking Partners. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to The Scotts Miracle-Gro Company (NYSE:SMG), around 5.86% of its 13F portfolio. Hudson Executive Capital is also relatively very bullish on the stock, earmarking 3.79 percent of its 13F equity portfolio to SMG.
Since The Scotts Miracle-Gro Company (NYSE:SMG) has faced falling interest from hedge fund managers, logic holds that there was a specific group of fund managers who were dropping their positions entirely in the first quarter. At the top of the heap, Tom Gayner's Markel Gayner Asset Management dumped the largest stake of the 750 funds tracked by Insider Monkey, valued at about $44.8 million in stock, and Phill Gross and Robert Atchinson's Adage Capital Management was right behind this move, as the fund dropped about $10.6 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds in the first quarter.
Let's also examine hedge fund activity in other stocks similar to The Scotts Miracle-Gro Company (NYSE:SMG). We will take a look at Pegasystems Inc. (NASDAQ:PEGA), Huaneng Power International Inc (NYSE:HNP), Commerce Bancshares, Inc. (NASDAQ:CBSH), and Penumbra Inc (NYSE:PEN). All of these stocks' market caps are closest to SMG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PEGA,33,1023977,8 HNP,3,2437,0 CBSH,15,44791,5 PEN,20,247173,-10 Average,17.75,329595,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $256 million in SMG's case. Pegasystems Inc. (NASDAQ:PEGA) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 3 bullish hedge fund positions. The Scotts Miracle-Gro Company (NYSE:SMG) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on SMG as the stock returned 39.8% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.