While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding SOS Limited (NYSE:SOS).
SOS Limited (NYSE:SOS) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 8. SOS investors should be aware of an increase in activity from the world's largest hedge funds lately. There were 0 hedge funds in our database with SOS holdings at the end of December. Our calculations also showed that SOS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are dozens of metrics shareholders employ to assess publicly traded companies. A pair of the less known metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a solid amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's review the latest hedge fund action regarding SOS Limited (NYSE:SOS).
Do Hedge Funds Think SOS Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SOS over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in SOS Limited (NYSE:SOS), which was worth $9.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $1.3 million worth of shares. Millennium Management, PEAK6 Capital Management, and Paloma Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to SOS Limited (NYSE:SOS), around 0.01% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, earmarking 0.0025 percent of its 13F equity portfolio to SOS.
Now, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized call position in SOS Limited (NYSE:SOS). Citadel Investment Group had $9.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Matthew Hulsizer's PEAK6 Capital Management, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as SOS Limited (NYSE:SOS) but similarly valued. These stocks are Farmers & Merchants Bancorp (NYSE:FMCB), Advent Technologies Holdings, Inc. (NASDAQ:ADN), CEL-SCI Corporation (NYSE:CVM), Triple-S Management Corp.(NYSE:GTS), Cooper-Standard Holdings Inc (NYSE:CPS), First Financial Corp (NASDAQ:THFF), and Lydall, Inc. (NYSE:LDL). This group of stocks' market values resemble SOS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMCB,2,1315,1 ADN,16,32750,16 CVM,5,20832,-1 GTS,10,106043,-2 CPS,14,42382,-1 THFF,7,38549,-2 LDL,12,89447,-4 Average,9.4,47331,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $3 million in SOS's case. Advent Technologies Holdings, Inc. (NASDAQ:ADN) is the most popular stock in this table. On the other hand Farmers & Merchants Bancorp (NYSE:FMCB) is the least popular one with only 2 bullish hedge fund positions. SOS Limited (NYSE:SOS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SOS is 46.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately SOS wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SOS investors were disappointed as the stock returned -32.9% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.