Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SiteOne Landscape Supply, Inc. (NYSE:SITE).
SiteOne Landscape Supply, Inc. (NYSE:SITE) was in 12 hedge funds' portfolios at the end of March. SITE investors should pay attention to an increase in support from the world's most elite money managers lately. There were 11 hedge funds in our database with SITE positions at the end of the previous quarter. Our calculations also showed that SITE isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to take a look at the recent hedge fund action surrounding SiteOne Landscape Supply, Inc. (NYSE:SITE).
Hedge fund activity in SiteOne Landscape Supply, Inc. (NYSE:SITE)
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards SITE over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Greenhouse Funds was the largest shareholder of SiteOne Landscape Supply, Inc. (NYSE:SITE), with a stake worth $14.3 million reported as of the end of March. Trailing Greenhouse Funds was Two Sigma Advisors, which amassed a stake valued at $6.2 million. Lionstone Capital Management, GLG Partners, and Carlson Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have been driving this bullishness. Greenhouse Funds, managed by Joe Milano, initiated the biggest position in SiteOne Landscape Supply, Inc. (NYSE:SITE). Greenhouse Funds had $14.3 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also made a $3.3 million investment in the stock during the quarter. The other funds with brand new SITE positions are Clint Carlson's Carlson Capital, Steve Cohen's Point72 Asset Management, and Curtis Schenker and Craig Effron's Scoggin.
Let's check out hedge fund activity in other stocks similar to SiteOne Landscape Supply, Inc. (NYSE:SITE). These stocks are Sibanye Gold Ltd (NYSE:SBGL), Halozyme Therapeutics, Inc. (NASDAQ:HALO), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and Aphria Inc. (NYSE:APHA). This group of stocks' market values resemble SITE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SBGL,12,54954,0 HALO,18,73646,2 BBBY,29,478941,-1 APHA,9,8864,3 Average,17,154101,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $43 million in SITE's case. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is the most popular stock in this table. On the other hand Aphria Inc. (NYSE:APHA) is the least popular one with only 9 bullish hedge fund positions. SiteOne Landscape Supply, Inc. (NYSE:SITE) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on SITE as the stock returned 20% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.