You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Spectrum Brands Holdings, Inc. (NYSE:SPB) investors should pay attention to a decrease in hedge fund interest lately. Our calculations also showed that SPB isn't among the 30 most popular stocks among hedge funds.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a gander at the new hedge fund action regarding Spectrum Brands Holdings, Inc. (NYSE:SPB).
What does the smart money think about Spectrum Brands Holdings, Inc. (NYSE:SPB)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SPB over the last 15 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Leucadia National, managed by Ian Cumming and Joseph Steinberg, holds the most valuable position in Spectrum Brands Holdings, Inc. (NYSE:SPB). Leucadia National has a $411.6 million position in the stock, comprising 41% of its 13F portfolio. On Leucadia National's heels is Allan Mecham and Ben Raybould of Arlington Value Capital, with a $172.6 million position; 12.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions contain Amy Minella's Cardinal Capital, Amit Wadhwaney's Moerus Capital Management and Richard S. Pzena's Pzena Investment Management.
Due to the fact that Spectrum Brands Holdings, Inc. (NYSE:SPB) has faced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of funds that elected to cut their entire stakes last quarter. Intriguingly, Jim Simons's Renaissance Technologies said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, valued at about $11.1 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also said goodbye to its stock, about $1.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). We will take a look at Tellurian Inc. (NASDAQ:TELL), National Beverage Corp. (NASDAQ:FIZZ), AppFolio Inc (NASDAQ:APPF), and KBR, Inc. (NYSE:KBR). This group of stocks' market caps resemble SPB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TELL,16,125497,1 FIZZ,21,248749,0 APPF,15,230629,1 KBR,20,362648,-6 Average,18,241881,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $837 million in SPB's case. National Beverage Corp. (NASDAQ:FIZZ) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Spectrum Brands Holdings, Inc. (NYSE:SPB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SPB, though not to the same extent, as the stock returned 1.5% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.