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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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider SP Plus Corp (NASDAQ:SP) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is SP Plus Corp (NASDAQ:SP) a buy here? The best stock pickers were becoming less hopeful. The number of long hedge fund positions shrunk by 2 in recent months. SP Plus Corp (NASDAQ:SP) was in 13 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. Our calculations also showed that SP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with SP positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nick Thakore of Diametric Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind we're going to review the key hedge fund action surrounding SP Plus Corp (NASDAQ:SP).
Do Hedge Funds Think SP Is A Good Stock To Buy Now?
At Q3's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SP over the last 21 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in SP Plus Corp (NASDAQ:SP) was held by Renaissance Technologies, which reported holding $8 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $3.8 million position. Other investors bullish on the company included D E Shaw, Intrepid Capital Management, and Clearline Capital. In terms of the portfolio weights assigned to each position Cruiser Capital Advisors allocated the biggest weight to SP Plus Corp (NASDAQ:SP), around 1.26% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, earmarking 1.19 percent of its 13F equity portfolio to SP.
Judging by the fact that SP Plus Corp (NASDAQ:SP) has faced declining sentiment from hedge fund managers, we can see that there was a specific group of hedgies that decided to sell off their full holdings by the end of the third quarter. Interestingly, Claus Moller's P2 Capital Partners cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling close to $16.8 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund cut about $1.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as SP Plus Corp (NASDAQ:SP) but similarly valued. We will take a look at Enerplus Corp (NYSE:ERF), The Children's Place Inc. (NASDAQ:PLCE), Tekla Life Sciences Investors (NYSE:HQL), WAVE Life Sciences Ltd. (NASDAQ:WVE), Arlo Technologies, Inc. (NYSE:ARLO), ASA Gold and Precious Metals Ltd (NYSE:ASA), and U.S. Xpress Enterprises, Inc. (NYSE:USX). All of these stocks' market caps match SP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ERF,17,77008,1 PLCE,16,84447,-7 HQL,2,1362,0 WVE,24,163279,7 ARLO,16,43387,1 ASA,5,14951,0 USX,12,14049,6 Average,13.1,56926,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $24 million in SP's case. WAVE Life Sciences Ltd. (NASDAQ:WVE) is the most popular stock in this table. On the other hand Tekla Life Sciences Investors (NYSE:HQL) is the least popular one with only 2 bullish hedge fund positions. SP Plus Corp (NASDAQ:SP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SP is 45. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on SP as the stock returned 70% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.