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Is SSD Stock A Buy or Sell?

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Abigail Fisher
·5 min read
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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 Simpson Manufacturing Co, Inc. (NYSE:SSD).

Is SSD stock a buy? Hedge funds were getting more bullish. The number of bullish hedge fund bets increased by 8 recently. Simpson Manufacturing Co, Inc. (NYSE:SSD) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 26. Our calculations also showed that SSD isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Jack Ripsteen Tim Ripsteen Potrero Capital
Jack Ripsteen Tim Ripsteen Potrero Capital

Jack Ripsteen of Potrero Capital Research

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let's take a look at the key hedge fund action surrounding Simpson Manufacturing Co, Inc. (NYSE:SSD).

Do Hedge Funds Think SSD Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SSD over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, John W. Rogers's Ariel Investments has the biggest position in Simpson Manufacturing Co, Inc. (NYSE:SSD), worth close to $58.4 million, comprising 0.7% of its total 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $39.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Ken Fisher's Fisher Asset Management. In terms of the portfolio weights assigned to each position Potrero Capital Research allocated the biggest weight to Simpson Manufacturing Co, Inc. (NYSE:SSD), around 0.96% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, designating 0.66 percent of its 13F equity portfolio to SSD.

Consequently, specific money managers were leading the bulls' herd. Millennium Management, managed by Israel Englander, initiated the biggest position in Simpson Manufacturing Co, Inc. (NYSE:SSD). Millennium Management had $20.6 million invested in the company at the end of the quarter. Jack Ripsteen's Potrero Capital Research also made a $7.6 million investment in the stock during the quarter. The other funds with brand new SSD positions are Peter Muller's PDT Partners, Matthew Hulsizer's PEAK6 Capital Management, and Dmitry Balyasny's Balyasny Asset Management.

Let's now review hedge fund activity in other stocks similar to Simpson Manufacturing Co, Inc. (NYSE:SSD). These stocks are Cannae Holdings, Inc. (NYSE:CNNE), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Hexcel Corporation (NYSE:HXL), Bank OZK (NASDAQ:OZK), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), Park Hotels & Resorts Inc. (NYSE:PK), and The Hain Celestial Group, Inc. (NASDAQ:HAIN). All of these stocks' market caps are similar to SSD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNNE,34,534239,5 AY,14,98156,3 HXL,25,166619,5 OZK,20,260732,0 AJRD,36,802349,10 PK,13,112554,-4 HAIN,23,964598,2 Average,23.6,419892,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $420 million. That figure was $220 million in SSD's case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Park Hotels & Resorts Inc. (NYSE:PK) is the least popular one with only 13 bullish hedge fund positions. Simpson Manufacturing Co, Inc. (NYSE:SSD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSD is 64.9. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on SSD as the stock returned 15.3% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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