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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. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider The Boston Beer Company Inc (NYSE:SAM) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
The Boston Beer Company Inc (NYSE:SAM) shareholders have witnessed a decrease in enthusiasm from smart money of late. The Boston Beer Company Inc (NYSE:SAM) was in 29 hedge funds' portfolios at the end of March. The all time high for this statistic is 36. There were 35 hedge funds in our database with SAM holdings at the end of December. Our calculations also showed that SAM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Andrew Sandler of Sandler Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a gander at the recent hedge fund action regarding The Boston Beer Company Inc (NYSE:SAM).
Do Hedge Funds Think SAM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SAM over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in The Boston Beer Company Inc (NYSE:SAM), worth close to $366.6 million, corresponding to 0.5% of its total 13F portfolio. The second most bullish fund manager is Fisher Asset Management, led by Ken Fisher, holding a $138.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Robert Boucai's Newbrook Capital Advisors, and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Newbrook Capital Advisors allocated the biggest weight to The Boston Beer Company Inc (NYSE:SAM), around 5.94% of its 13F portfolio. Stamina Capital Management is also relatively very bullish on the stock, designating 4.44 percent of its 13F equity portfolio to SAM.
Since The Boston Beer Company Inc (NYSE:SAM) has witnessed falling interest from the smart money, it's safe to say that there lies a certain "tier" of money managers that decided to sell off their positions entirely by the end of the first quarter. It's worth mentioning that Israel Englander's Millennium Management cut the largest position of all the hedgies watched by Insider Monkey, worth an estimated $53.5 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also sold off its stock, about $13.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks similar to The Boston Beer Company Inc (NYSE:SAM). We will take a look at Devon Energy Corporation (NYSE:DVN), Ares Management Corp (NYSE:ARES), Cognex Corporation (NASDAQ:CGNX), Lumen Technologies, Inc. (NYSE:LUMN), News Corp (NASDAQ:NWS), News Corp (NASDAQ:NWSA), and Charles River Laboratories International Inc. (NYSE:CRL). This group of stocks' market caps resemble SAM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DVN,52,1466337,7 ARES,16,565174,-4 CGNX,34,498509,3 LUMN,32,1004948,3 NWS,21,168400,10 NWSA,35,1235000,3 CRL,42,1118745,-1 Average,33.1,865302,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $865 million. That figure was $904 million in SAM's case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand Ares Management Corp (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. The Boston Beer Company Inc (NYSE:SAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SAM is 41.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately SAM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SAM investors were disappointed as the stock returned -20.9% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.