We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Silvercrest Asset Management Group Inc (NASDAQ:SAMG).
Is Silvercrest Asset Management Group Inc (NASDAQ:SAMG) ready to rally soon? Hedge funds are taking an optimistic view. The number of long hedge fund bets improved by 1 recently. Our calculations also showed that SAMG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). SAMG was in 4 hedge funds' portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with SAMG positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to analyze the key hedge fund action surrounding Silvercrest Asset Management Group Inc (NASDAQ:SAMG).
How are hedge funds trading Silvercrest Asset Management Group Inc (NASDAQ:SAMG)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in SAMG a year ago. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in Silvercrest Asset Management Group Inc (NASDAQ:SAMG). Royce & Associates has a $7.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates's heels is Renaissance Technologies, which holds a $3.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Anton Schutz's Mendon Capital Advisors, Thomas Bailard's Bailard Inc and . In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Silvercrest Asset Management Group Inc (NASDAQ:SAMG), around 0.4% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to SAMG.
As aggregate interest increased, specific money managers were leading the bulls' herd. Bailard Inc, managed by Thomas Bailard, created the biggest position in Silvercrest Asset Management Group Inc (NASDAQ:SAMG). Bailard Inc had $0.1 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks similar to Silvercrest Asset Management Group Inc (NASDAQ:SAMG). We will take a look at XOMA Corp (NASDAQ:XOMA), J Alexander's Holdings Inc (NYSE:JAX), Enzo Biochem, Inc. (NYSE:ENZ), and Forum Energy Technologies Inc (NYSE:FET). This group of stocks' market caps match SAMG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XOMA,5,43538,-2 JAX,9,29019,-2 ENZ,10,38824,0 FET,16,19195,-3 Average,10,32644,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $13 million in SAMG's case. Forum Energy Technologies Inc (NYSE:FET) is the most popular stock in this table. On the other hand XOMA Corp (NASDAQ:XOMA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Silvercrest Asset Management Group Inc (NASDAQ:SAMG) is even less popular than XOMA. Hedge funds dodged a bullet by taking a bearish stance towards SAMG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SAMG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SAMG investors were disappointed as the stock returned 5.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.