How do we determine whether Spectrum Brands Holdings, Inc. (NYSE:SPB) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors. ETF sponsors doesn't like SPB much. The only ETF with a significant holding in SPB was WisdomTree U.S. SmallCap Dividend Fund (NYSE:DES) and its weight was 0.88%.
Is Spectrum Brands Holdings, Inc. (NYSE:SPB) a healthy stock for your portfolio? The smart money is buying. The number of bullish hedge fund bets advanced by 10 recently. Our calculations also showed that SPB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are over 8000 funds in operation at the moment, Our experts look at the upper echelon of this group, approximately 750 funds. It is estimated that this group of investors watch over bulk of the hedge fund industry's total asset base, and by following their unrivaled picks, Insider Monkey has come up with a number of investment strategies that have historically defeated the broader indices. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_338852" align="aligncenter" width="500"] Richard S. Pzena of Pzena Investment Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the latest hedge fund action surrounding Spectrum Brands Holdings, Inc. (NYSE:SPB).
What does smart money think about Spectrum Brands Holdings, Inc. (NYSE:SPB)?
At Q3's end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 42% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in SPB 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.
The largest stake in Spectrum Brands Holdings, Inc. (NYSE:SPB) was held by Leucadia National, which reported holding $396.2 million worth of stock at the end of September. It was followed by Arlington Value Capital with a $164.4 million position. Other investors bullish on the company included Pzena Investment Management, Moerus Capital Management, and Cardinal Capital. In terms of the portfolio weights assigned to each position Leucadia National allocated the biggest weight to Spectrum Brands Holdings, Inc. (NYSE:SPB), around 71.25% of its portfolio. Moerus Capital Management is also relatively very bullish on the stock, designating 12.33 percent of its 13F equity portfolio to SPB.
Consequently, key money managers have been driving this bullishness. Renaissance Technologies created the most valuable position in Spectrum Brands Holdings, Inc. (NYSE:SPB). Renaissance Technologies had $3.8 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $3.1 million investment in the stock during the quarter. The other funds with brand new SPB positions are Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Michael Price's MFP Investors.
Let's check out hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). We will take a look at California Water Service Group (NYSE:CWT), Allegheny Technologies Incorporated (NYSE:ATI), Immunomedics, Inc. (NASDAQ:IMMU), and WW International, Inc. (NASDAQ:WW). All of these stocks' market caps are similar to SPB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CWT,15,52003,3 ATI,20,155971,-1 IMMU,20,537294,-1 WW,28,537184,7 Average,20.75,320613,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $785 million in SPB's case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand California Water Service Group (NYSE:CWT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Spectrum Brands Holdings, Inc. (NYSE:SPB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SPB as the stock returned 19.4% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.