Here is What Hedge Funds Think About Scotts Miracle-Gro Co (SMG)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Scotts Miracle-Gro Co (NYSE:SMG) .

Scotts Miracle-Gro Co (NYSE:SMG) was in 20 hedge funds’ portfolios at the end of September. SMG investors should pay attention to a decrease in support from the world’s most successful money managers lately. There were 24 hedge funds in our database with SMG positions at the end of the previous quarter. At the end of this article we will also compare SMG to other stocks including Weatherford International Ltd (NYSE:WFT), Gentex Corporation (NASDAQ:GNTX), and EPR Properties (NYSE:EPR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Scotts Miracle-Gro Co (NYSE:SMG)?

At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, down by 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SMG over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Fisher Asset Management, led by Ken Fisher, holds the most valuable position in Scotts Miracle-Gro Co (NYSE:SMG). Fisher Asset Management has a $128.3 million position in the stock. Coming in second is Jim Simons’ Renaissance Technologies, with a $25.8 million position. Remaining professional money managers that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management and Ira Unschuld’s Brant Point Investment Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Scotts Miracle-Gro Co (NYSE:SMG) has encountered declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who sold off their positions entirely last quarter. Interestingly, Jean-Marie Eveillard’s First Eagle Investment Management dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling about $398.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $8.6 million worth of shares.

Let’s also examine hedge fund activity in other stocks similar to Scotts Miracle-Gro Co (NYSE:SMG). We will take a look at Weatherford International Ltd (NYSE:WFT), Gentex Corporation (NASDAQ:GNTX), EPR Properties (NYSE:EPR), and Watsco Inc (NYSE:WSO). All of these stocks’ market caps are similar to SMG’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $226 million in SMG’s case. Weatherford International Ltd (NYSE:WFT) is the most popular stock in this table. On the other hand Watsco Inc (NYSE:WSO) is the least popular one with only 18 bullish hedge fund positions. Scotts Miracle-Gro Co (NYSE:SMG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WFT might be a better candidate to consider taking a long position in.

Disclosure: None