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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Shaw Communications Inc (NYSE:SJR).
Shaw Communications Inc (NYSE:SJR) investors should pay attention to an increase in enthusiasm from smart money recently. Shaw Communications Inc (NYSE:SJR) was in 21 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with SJR positions at the end of the fourth quarter. Our calculations also showed that SJR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 we're going to take a look at the new hedge fund action encompassing Shaw Communications Inc (NYSE:SJR).
Do Hedge Funds Think SJR Is A Good Stock To Buy Now?
At first quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SJR over the last 23 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Shaw Communications Inc (NYSE:SJR) was held by Magnetar Capital, which reported holding $134.2 million worth of stock at the end of December. It was followed by Sand Grove Capital Partners with a $73.7 million position. Other investors bullish on the company included Renaissance Technologies, Columbus Hill Capital Management, and NewGen Asset Management. In terms of the portfolio weights assigned to each position Sand Grove Capital Partners allocated the biggest weight to Shaw Communications Inc (NYSE:SJR), around 7.18% of its 13F portfolio. NewGen Asset Management is also relatively very bullish on the stock, setting aside 6.74 percent of its 13F equity portfolio to SJR.
As one would reasonably expect, specific money managers were leading the bulls' herd. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the most valuable position in Shaw Communications Inc (NYSE:SJR). Magnetar Capital had $134.2 million invested in the company at the end of the quarter. Simon Davies's Sand Grove Capital Partners also initiated a $73.7 million position during the quarter. The other funds with brand new SJR positions are Kevin D. Eng's Columbus Hill Capital Management, Carl Tiedemann and Michael Tiedemann's TIG Advisors, and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors.
Let's go over hedge fund activity in other stocks similar to Shaw Communications Inc (NYSE:SJR). We will take a look at Nuance Communications Inc. (NASDAQ:NUAN), W.P. Carey Inc. (NYSE:WPC), NortonLifeLock Inc. (NASDAQ:NLOK), Ceridian HCM Holding Inc. (NYSE:CDAY), Medical Properties Trust, Inc. (NYSE:MPW), Texas Pacific Land Trust (NYSE:TPL), and Sunrun Inc (NASDAQ:RUN). This group of stocks' market valuations resemble SJR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NUAN,57,4129595,-3 WPC,23,162726,5 NLOK,32,1028034,3 CDAY,28,1097868,2 MPW,23,271470,7 TPL,17,2556654,6 RUN,41,2405187,-7 Average,31.6,1664505,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1665 million. That figure was $385 million in SJR's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Texas Pacific Land Trust (NYSE:TPL) is the least popular one with only 17 bullish hedge fund positions. Shaw Communications Inc (NYSE:SJR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SJR is 42. 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 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 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on SJR, though not to the same extent, as the stock returned 11% since the end of Q1 (through July 16th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.