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Is Sanderson Farms, Inc. (SAFM) A Good Stock To Buy?

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The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Sanderson Farms, Inc. (NASDAQ:SAFM).

Sanderson Farms, Inc. was in 18 hedge funds’ portfolios at the end of September. SAFM investors should be aware of a decrease in activity from the world’s largest hedge funds recently. There were 21 hedge funds in our database with SAFM positions at the end of the previous quarter. At the end of this article we will also compare SAFM to other stocks including Acxiom Corporation (NASDAQ:ACXM), WMS Industries Inc. (NYSE:WMS), and Revlon Inc (NYSE:REV) to get a better sense of its popularity.

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If you’d ask most stock holders, hedge funds are viewed as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our researchers hone in on the masters of this group, about 700 funds. These money managers command most of all hedge funds’ total asset base, and by shadowing their matchless picks, Insider Monkey has discovered many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s take a look at the latest action encompassing Sanderson Farms, Inc. (NASDAQ:SAFM).

Hedge fund activity in Sanderson Farms, Inc. (NASDAQ:SAFM)

Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Sanderson Farms, Inc. (NASDAQ:SAFM), worth close to $72.9 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $67.7 million position; 0.7% of its 13F portfolio is allocated to the company. Some other peers that are bullish encompass Carl Goldsmith and Scott Klein’s Beach Point Capital Management,  D E Shaw and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

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