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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Steelcase Inc. (NYSE:SCS).
Is Steelcase Inc. (NYSE:SCS) a safe stock to buy now? Investors who are in the know are becoming less hopeful. The number of long hedge fund bets fell by 7 lately. Our calculations also showed that SCS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). SCS was in 23 hedge funds' portfolios at the end of the first quarter of 2020. There were 30 hedge funds in our database with SCS positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Bruce Kovner of Caxton Associates LP[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to review the recent hedge fund action regarding Steelcase Inc. (NYSE:SCS).
Hedge fund activity in Steelcase Inc. (NYSE:SCS)
Heading into the second quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SCS over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the most valuable position in Steelcase Inc. (NYSE:SCS). Renaissance Technologies has a $17.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $13.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Richard S. Pzena's Pzena Investment Management, John Overdeck and David Siegel's Two Sigma Advisors and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Arjuna Capital allocated the biggest weight to Steelcase Inc. (NYSE:SCS), around 0.31% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to SCS.
Due to the fact that Steelcase Inc. (NYSE:SCS) has witnessed declining sentiment from the smart money, logic holds that there lies a certain "tier" of funds who were dropping their entire stakes in the first quarter. Intriguingly, Israel Englander's Millennium Management sold off the largest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $12 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund sold off about $9.5 million worth. These moves are important to note, as total hedge fund interest fell by 7 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Steelcase Inc. (NYSE:SCS). These stocks are First Bancorp (NYSE:FBP), Verra Mobility Corporation (NASDAQ:VRRM), BrightView Holdings, Inc. (NYSE:BV), and Rush Enterprises, Inc. (NASDAQ:RUSHA). This group of stocks' market valuations are similar to SCS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FBP,24,132891,-8 VRRM,23,105855,-10 BV,8,160603,-1 RUSHA,17,43687,-7 Average,18,110759,-6.5 [/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 $111 million. That figure was $64 million in SCS's case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand BrightView Holdings, Inc. (NYSE:BV) is the least popular one with only 8 bullish hedge fund positions. Steelcase Inc. (NYSE:SCS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on SCS as the stock returned 31.5% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.