Should You Buy SiteOne Landscape Supply Inc (SITE)?

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 SiteOne Landscape Supply Inc (NYSE:SITE).

SiteOne Landscape Supply Inc (NYSE:SITE) has experienced an increase in activity from the world’s largest hedge funds lately. There were 9 hedge funds in our database with SITE holdings at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as BofI Holding, Inc. (NASDAQ:BOFI), NBT Bancorp Inc. (NASDAQ:NBTB), and Renasant Corp. (NASDAQ:RNST) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

With all of this in mind, we’re going to take a glance at the latest action surrounding SiteOne Landscape Supply Inc (NYSE:SITE).

How are hedge funds trading SiteOne Landscape Supply Inc (NYSE:SITE)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 44% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SITE over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the number one position in SiteOne Landscape Supply Inc (NYSE:SITE), worth close to $26.2 million, comprising less than 0.1%% of its total 13F portfolio. On Millennium Management’s heels is Brad Dunkley and Blair Levinsky of Waratah Capital Advisors, with a brand new $12.3 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Matthew A. Weatherbie’s Weatherbie Capital, Ben Gambill’s Tiger Eye Capital and Ken Griffin’s Citadel Investment Group. 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.

Consequently, key hedge funds have jumped into SiteOne Landscape Supply Inc (NYSE:SITE) headfirst. Waratah Capital Advisors’ position mentioned above was the largest new position in  SiteOne Landscape Supply Inc (NYSE:SITE). Ben Gambill’s Tiger Eye Capital also initiated a $8.4 million position during the quarter. The following funds were also among the new SITE investors: Mark N. Diker’s Diker Management, Frank Slattery’s Symmetry Peak Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks similar to SiteOne Landscape Supply Inc (NYSE:SITE). These stocks are BofI Holding, Inc. (NASDAQ:BOFI), NBT Bancorp Inc. (NASDAQ:NBTB), Renasant Corp. (NASDAQ:RNST), and First Interstate Bancsystem Inc (NASDAQ:FIBK). This group of stocks’ market valuations are closest to SITE’s market valuation.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $74 million in SITE’s case. BofI Holding, Inc. (NASDAQ:BOFI) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 4 bullish hedge fund positions. SiteOne Landscape Supply Inc (NYSE:SITE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BOFI might be a better candidate to consider taking a long position in.