"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Seaboard Corporation (NYSE:SEB).
Seaboard Corporation (NYSE:SEB) was in 11 hedge funds' portfolios at the end of the first quarter of 2019. SEB investors should be aware of an increase in enthusiasm from smart money in recent months. There were 10 hedge funds in our database with SEB holdings at the end of the previous quarter. Our calculations also showed that seb isn't among the 30 most popular stocks among hedge funds.
To most traders, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds in operation at present, Our researchers look at the moguls of this group, approximately 750 funds. These investment experts command the lion's share of the hedge fund industry's total capital, and by following their top picks, Insider Monkey has determined a few investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
[caption id="attachment_758450" align="aligncenter" width="450"] Martin Whitman of Third Avenue Management[/caption]
Let's check out the recent hedge fund action surrounding Seaboard Corporation (NYSE:SEB).
What have hedge funds been doing with Seaboard Corporation (NYSE:SEB)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SEB over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Seaboard Corporation (NYSE:SEB), with a stake worth $26.9 million reported as of the end of March. Trailing Renaissance Technologies was Sabrepoint Capital, which amassed a stake valued at $15.6 million. Third Avenue Management, Rubric Capital Management, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have been driving this bullishness. Rubric Capital Management, managed by David Rosen, created the largest position in Seaboard Corporation (NYSE:SEB). Rubric Capital Management had $7.1 million invested in the company at the end of the quarter. C. Jonathan Gattman's Cloverdale Capital Management also made a $1.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ric Dillon's Diamond Hill Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Seaboard Corporation (NYSE:SEB) but similarly valued. We will take a look at Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), Antero Midstream Corp (NYSE:AM), GDS Holdings Limited (NASDAQ:GDS), and Manpowergroup Inc (NYSE:MAN). All of these stocks' market caps match SEB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAC,7,85862,4 AM,19,321459,4 GDS,33,846857,8 MAN,19,490554,-6 Average,19.5,436183,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $436 million. That figure was $69 million in SEB's case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 7 bullish hedge fund positions. Seaboard Corporation (NYSE:SEB) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SEB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SEB investors were disappointed as the stock returned -3.7% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.