Is Scotts Miracle-Gro Co (NYSE:SMG) a bargain? Investors who are in the know are in an optimistic mood. The number of bullish hedge fund positions moved up by 3 lately.
In the financial world, there are plenty of gauges investors can use to track stocks. A pair of the best are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outperform the S&P 500 by a very impressive amount (see just how much).
Just as important, positive insider trading activity is another way to parse down the financial markets. As the old adage goes: there are plenty of reasons for a bullish insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the impressive potential of this method if shareholders understand what to do (learn more here).
Keeping this in mind, we’re going to take a peek at the latest action surrounding Scotts Miracle-Gro Co (NYSE:SMG).
What have hedge funds been doing with Scotts Miracle-Gro Co (NYSE:SMG)?
At the end of the fourth quarter, a total of 13 of the hedge funds we track held long positions in this stock, a change of 30% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the largest position in Scotts Miracle-Gro Co (NYSE:SMG). First Eagle Investment Management has a $255 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $51 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Ken Griffin’s Citadel Investment Group, Mario Gabelli’s GAMCO Investors and Jim Simons’s Renaissance Technologies.
As one would reasonably expect, some big names were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, assembled the largest position in Scotts Miracle-Gro Co (NYSE:SMG). Renaissance Technologies had 4 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also made a $3 million investment in the stock during the quarter. The following funds were also among the new SMG investors: Cliff Asness’s AQR Capital Management, Steven Cohen’s SAC Capital Advisors, and Glenn Russell Dubin’s Highbridge Capital Management.
How have insiders been trading Scotts Miracle-Gro Co (NYSE:SMG)?
Insider buying is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, Scotts Miracle-Gro Co (NYSE:SMG) has seen zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Scotts Miracle-Gro Co (NYSE:SMG). These stocks are American Vanguard Corp. (NYSE:AVD), Rentech Nitrogen Partners LP (NYSE:RNF), Intrepid Potash, Inc. (NYSE:IPI), Terra Nitrogen Company, L.P. (NYSE:TNH), and CVR Partners LP (NYSE:UAN). This group of stocks belong to the agricultural chemicals industry and their market caps are similar to SMG’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|American Vanguard Corp. (NYSE:AVD)||9||1||3|
|Rentech Nitrogen Partners LP (NYSE:RNF)||6||0||0|
|Intrepid Potash, Inc. (NYSE:IPI)||5||0||0|
|Terra Nitrogen Company, L.P. (NYSE:TNH)||2||0||0|
|CVR Partners LP (NYSE:UAN)||2||0||1|
With the returns shown by the aforementioned research, retail investors should always watch hedge fund and insider trading activity, and Scotts Miracle-Gro Co (NYSE:SMG) is an important part of this process.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.