We are still in an overall bull market and many stocks that smart money investors were piling into surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Hedge funds' top 3 stock picks returned 39.1% this year and beat the S&P 500 ETFs by nearly 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Super League Gaming, Inc. (NASDAQ:SLGG).
Is Super League Gaming, Inc. (NASDAQ:SLGG) worth your attention right now? Investors who are in the know are in an optimistic mood. The number of long hedge fund positions increased by 2 recently. Our calculations also showed that SLGG 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' 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 Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_27480" align="aligncenter" width="450"] Israel Englander of Millennium Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the latest hedge fund action regarding Super League Gaming, Inc. (NASDAQ:SLGG).
What have hedge funds been doing with Super League Gaming, Inc. (NASDAQ:SLGG)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 200% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SLGG over the last 17 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Symmetry Peak Management, managed by Frank Slattery, holds the number one position in Super League Gaming, Inc. (NASDAQ:SLGG). Symmetry Peak Management has a $0.4 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Symmetry Peak Management allocated the biggest weight to Super League Gaming, Inc. (NASDAQ:SLGG), around 0.17% of its portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to SLGG.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in Super League Gaming, Inc. (NASDAQ:SLGG). Millennium Management had $0.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Springbok Capital also initiated a $0 million position during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Super League Gaming, Inc. (NASDAQ:SLGG) but similarly valued. These stocks are TransAtlantic Petroleum Ltd (NYSE:TAT), Xtant Medical Holdings, Inc. (NYSE:XTNT), Xcel Brands Inc (NASDAQ:XELB), and Capstone Turbine Corporation (NASDAQ:CPST). This group of stocks' market caps match SLGG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TAT,3,5026,-1 XTNT,3,29952,0 XELB,4,613,2 CPST,5,3897,0 Average,3.75,9872,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $0 million in SLGG's case. Capstone Turbine Corporation (NASDAQ:CPST) is the most popular stock in this table. On the other hand TransAtlantic Petroleum Ltd (NYSE:TAT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Super League Gaming, Inc. (NASDAQ:SLGG) is even less popular than TAT. Hedge funds dodged a bullet by taking a bearish stance towards SLGG. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately SLGG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SLGG investors were disappointed as the stock returned -51.3% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.