We can judge whether Spectrum Brands Holdings, Inc. (NYSE:SPB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Spectrum Brands Holdings, Inc. (NYSE:SPB) was in 24 hedge funds' portfolios at the end of June. SPB has seen an increase in hedge fund sentiment lately. There were 22 hedge funds in our database with SPB positions at the end of the previous quarter. Our calculations also showed that SPB isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are plenty of gauges shareholders have at their disposal to assess publicly traded companies. A pair of the best gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can beat the market by a solid amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the recent hedge fund action surrounding Spectrum Brands Holdings, Inc. (NYSE:SPB).
How have hedgies been trading Spectrum Brands Holdings, Inc. (NYSE:SPB)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SPB over the last 16 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Leucadia National held the most valuable stake in Spectrum Brands Holdings, Inc. (NYSE:SPB), which was worth $404.1 million at the end of the second quarter. On the second spot was Arlington Value Capital which amassed $165.6 million worth of shares. Moreover, Cardinal Capital, Pzena Investment Management, and Moerus Capital Management were also bullish on Spectrum Brands Holdings, Inc. (NYSE:SPB), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, established the largest position in Spectrum Brands Holdings, Inc. (NYSE:SPB). AQR Capital Management had $9.6 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $3.9 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Mike Vranos's Ellington, and Michael Gelband's ExodusPoint Capital.
Let's now review hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). These stocks are First Interstate Bancsystem Inc (NASDAQ:FIBK), Box, Inc. (NYSE:BOX), MGE Energy, Inc. (NASDAQ:MGEE), and Independent Bank Corp (NASDAQ:INDB). This group of stocks' market values resemble SPB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIBK,11,66475,0 BOX,27,395491,-5 MGEE,13,53798,4 INDB,11,16780,5 Average,15.5,133136,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $835 million in SPB's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 11 bullish hedge fund positions. Spectrum Brands Holdings, Inc. (NYSE:SPB) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SPB wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SPB were disappointed as the stock returned -1.1% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.