Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Sachem Capital Corp. (NYSE:SACH) based on that data.
Sachem Capital Corp. (NYSE:SACH) shareholders have witnessed an increase in activity from the world's largest hedge funds lately. SACH was in 3 hedge funds' portfolios at the end of the third quarter of 2019. There were 2 hedge funds in our database with SACH positions at the end of the previous quarter. Our calculations also showed that SACH 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 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 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 stocks that are in our short portfolio.
[caption id="attachment_26073" align="aligncenter" width="600"] Jim Simons of RENAISSANCE TECHNOLOGIES[/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 check out the fresh hedge fund action regarding Sachem Capital Corp. (NYSE:SACH).
What does smart money think about Sachem Capital Corp. (NYSE:SACH)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in SACH over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in Sachem Capital Corp. (NYSE:SACH), worth close to $1.3 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $1.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position HighVista Strategies allocated the biggest weight to Sachem Capital Corp. (NYSE:SACH), around 0.05% of its portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.0028 percent of its 13F equity portfolio to SACH.
As one would reasonably expect, specific money managers were breaking ground themselves. HighVista Strategies, managed by Andre F. Perold, initiated the largest position in Sachem Capital Corp. (NYSE:SACH). HighVista Strategies had $0.1 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Sachem Capital Corp. (NYSE:SACH). These stocks are Taseko Mines Limited (NYSEAMEX:TGB), Assertio Therapeutics, Inc. (NASDAQ:ASRT), Landmark Bancorp, Inc. (NASDAQ:LARK), and Severn Bancorp Inc (NASDAQ:SVBI). This group of stocks' market values resemble SACH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TGB,4,5045,0 ASRT,12,18154,1 LARK,2,5685,0 SVBI,3,10634,0 Average,5.25,9880,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $3 million in SACH's case. Assertio Therapeutics, Inc. (NASDAQ:ASRT) is the most popular stock in this table. On the other hand Landmark Bancorp, Inc. (NASDAQ:LARK) is the least popular one with only 2 bullish hedge fund positions. Sachem Capital Corp. (NYSE:SACH) 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 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately SACH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SACH investors were disappointed as the stock returned -7.9% during the fourth quarter (through 11/22) 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.