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 Strategic Education Inc (NASDAQ:STRA) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Strategic Education Inc (NASDAQ:STRA) a healthy stock for your portfolio? The best stock pickers were in a bullish mood. The number of bullish hedge fund bets increased by 8 in recent months. Strategic Education Inc (NASDAQ:STRA) was in 21 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STRA 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). There were 13 hedge funds in our database with STRA holdings at the end of March. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
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. Keeping this in mind we're going to review the recent hedge fund action regarding Strategic Education Inc (NASDAQ:STRA).
Hedge fund activity in Strategic Education Inc (NASDAQ:STRA)
At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from the first quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in STRA a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Strategic Education Inc (NASDAQ:STRA), which was worth $101 million at the end of the third quarter. On the second spot was ValueAct Capital which amassed $90.9 million worth of shares. Goodnow Investment Group, D E Shaw, and Citadel Investment Group 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 Goodnow Investment Group allocated the biggest weight to Strategic Education Inc (NASDAQ:STRA), around 4.28% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, designating 3.25 percent of its 13F equity portfolio to STRA.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. PDT Partners, managed by Peter Muller, established the most valuable position in Strategic Education Inc (NASDAQ:STRA). PDT Partners had $2.4 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also made a $2 million investment in the stock during the quarter. The other funds with brand new STRA positions are Paul Tudor Jones's Tudor Investment Corp, Michael Gelband's ExodusPoint Capital, and Benjamin A. Smith's Laurion Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Strategic Education Inc (NASDAQ:STRA). We will take a look at PVH Corp (NYSE:PVH), Coty Inc (NYSE:COTY), Seaboard Corporation (NYSE:SEB), Semtech Corporation (NASDAQ:SMTC), Change Healthcare Inc. (NASDAQ:CHNG), NeoGenomics, Inc. (NASDAQ:NEO), and bluebird bio Inc (NASDAQ:BLUE). This group of stocks' market caps are closest to STRA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PVH,28,474978,10 COTY,26,135189,-7 SEB,14,119011,-1 SMTC,25,157701,8 CHNG,47,1112137,0 NEO,19,65308,8 BLUE,37,388598,10 Average,28,350417,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $274 million in STRA's case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Seaboard Corporation (NYSE:SEB) is the least popular one with only 14 bullish hedge fund positions. Strategic Education Inc (NASDAQ:STRA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STRA is 50.6. 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. This is a slightly negative signal and 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately STRA wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); STRA investors were disappointed as the stock returned -40.1% in the third quarter 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.