Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and a 20% drop in stock prices. Things completely reversed in 2019 and stock indices hit record highs. Recent hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Superior Group of Companies, Inc. (NASDAQ:SGC) to find out whether it was one of their high conviction long-term ideas.
Superior Group of Companies, Inc. (NASDAQ:SGC) investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that SGC isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
[caption id="attachment_26073" align="aligncenter" width="450"] Jim Simons Founder of Renaissance Technologies[/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 view the latest hedge fund action surrounding Superior Group of Companies, Inc. (NASDAQ:SGC).
Hedge fund activity in Superior Group of Companies, Inc. (NASDAQ:SGC)
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SGC over the last 17 quarters. So, let's review 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 founded by Jim Simons has the largest position in Superior Group of Companies, Inc. (NASDAQ:SGC), worth close to $3.6 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Frederick DiSanto of Ancora Advisors, with a $0.4 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 Ancora Advisors allocated the biggest weight to Superior Group of Companies, Inc. (NASDAQ:SGC), around 0.02% of its portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.003 percent of its 13F equity portfolio to SGC.
Now, specific money managers have jumped into Superior Group of Companies, Inc. (NASDAQ:SGC) headfirst. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the biggest position in Superior Group of Companies, Inc. (NASDAQ:SGC). Springbok Capital had $0 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Superior Group of Companies, Inc. (NASDAQ:SGC) but similarly valued. These stocks are Orrstown Financial Services, Inc. (NASDAQ:ORRF), Rocky Brands, Inc. (NASDAQ:RCKY), CECO Environmental Corp. (NASDAQ:CECE), and LogicBio Therapeutics, Inc. (NASDAQ:LOGC). All of these stocks' market caps are closest to SGC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORRF,3,10791,0 RCKY,6,18964,-1 CECE,9,44549,-3 LOGC,6,106552,0 Average,6,45214,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $4 million in SGC's case. CECO Environmental Corp. (NASDAQ:CECE) is the most popular stock in this table. On the other hand Orrstown Financial Services, Inc. (NASDAQ:ORRF) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Superior Group of Companies, Inc. (NASDAQ:SGC) is even less popular than ORRF. Hedge funds dodged a bullet by taking a bearish stance towards SGC. 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 SGC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SGC investors were disappointed as the stock returned -17.6% 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.