Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Smart Sand, Inc. (NASDAQ:SND).
Smart Sand, Inc. (NASDAQ:SND) was in 4 hedge funds' portfolios at the end of the first quarter of 2020. SND has experienced a decrease in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with SND positions at the end of the previous quarter. Our calculations also showed that SND 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.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_728717" align="aligncenter" width="400"] Roger Ibbotson of Zebra Capital 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 stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 review the key hedge fund action surrounding Smart Sand, Inc. (NASDAQ:SND).
Hedge fund activity in Smart Sand, Inc. (NASDAQ:SND)
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -56% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in SND a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Sprott Asset Management, managed by Eric Sprott, holds the most valuable position in Smart Sand, Inc. (NASDAQ:SND). Sprott Asset Management has a $1 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Zebra Capital Management, led by Roger Ibbotson, holding a $0.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Ken Griffin's Citadel Investment Group, Chuck Royce's Royce & Associates and . In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Smart Sand, Inc. (NASDAQ:SND), around 0.12% of its 13F portfolio. Sprott Asset Management is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to SND.
Because Smart Sand, Inc. (NASDAQ:SND) has faced declining sentiment from the smart money, it's safe to say that there were a few fund managers who sold off their entire stakes by the end of the third quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $0.7 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $0.4 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Smart Sand, Inc. (NASDAQ:SND) but similarly valued. These stocks are Canterbury Park Holding Corporation (NASDAQ:CPHC), ConforMIS, Inc. (NASDAQ:CFMS), Stealth BioTherapeutics Corp (NASDAQ:MITO), and CohBar, Inc. (NASDAQ:CWBR). All of these stocks' market caps match SND's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPHC,1,4598,0 CFMS,7,6700,1 MITO,4,667,3 CWBR,2,241,0 Average,3.5,3052,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $1 million in SND's case. ConforMIS, Inc. (NASDAQ:CFMS) is the most popular stock in this table. On the other hand Canterbury Park Holding Corporation (NASDAQ:CPHC) is the least popular one with only 1 bullish hedge fund positions. Smart Sand, Inc. (NASDAQ:SND) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 beat the market by 13.2 percentage points. Unfortunately SND wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SND were disappointed as the stock returned 1.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.