Hedge Funds Are Betting On Sanderson Farms, Inc. (NASDAQ:SAFM)

Sanderson Farms, Inc. (NASDAQ:SAFM) investors should pay attention to an increase in enthusiasm from smart money recently.

Sanderson Farms, Inc. (NASDAQ:SAFM)

To most traders, hedge funds are perceived as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the bigwigs of this club, close to 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by tracking their best investments, we have determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as key, bullish insider trading sentiment is another way to parse down the investments you’re interested in. As the old adage goes: there are lots of stimuli for an insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if investors understand where to look (learn more here).

Now, it’s important to take a gander at the recent action encompassing Sanderson Farms, Inc. (NASDAQ:SAFM).

What does the smart money think about Sanderson Farms, Inc. (NASDAQ:SAFM)?

In preparation for this year, a total of 16 of the hedge funds we track were bullish in this stock, a change of 60% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes significantly.

According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Sanderson Farms, Inc. (NASDAQ:SAFM). Royce & Associates has a $122 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Phill Gross and Robert Atchinson of Adage Capital Management, with a $43 million position; 0% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

As aggregate interest increased, key money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the largest position in Sanderson Farms, Inc. (NASDAQ:SAFM). Renaissance Technologies had 10 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $2 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Glenn Russell Dubin’s Highbridge Capital Management.

What do corporate executives and insiders think about Sanderson Farms, Inc. (NASDAQ:SAFM)?

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the latest six-month time frame, Sanderson Farms, Inc. (NASDAQ:SAFM) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s time-tested strategies, retail investors should always monitor hedge fund and insider trading activity, and Sanderson Farms, Inc. (NASDAQ:SAFM) is no exception.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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