Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like SpartanNash Co (NASDAQ:SPTN) .
Is SpartanNash Co (NASDAQ:SPTN) an outstanding investment today? The best stock pickers are in an optimistic mood. The number of bullish hedge fund investments rose by 2 recently. There were 16 hedge funds in our database with SPTN holdings at the end of the previous quarter. At the end of this article we will also compare SPTN to other stocks including CVR Refining LP (NYSE:CVRR), Cynosure, Inc. (NASDAQ:CYNO), and Installed Building Products Inc (NYSE:IBP) to get a better sense of its popularity.
Follow Spartannash Co (NASDAQ:SPTN)
Follow Spartannash Co (NASDAQ:SPTN)
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.
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What does the smart money think about SpartanNash Co (NASDAQ:SPTN)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 13% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in SPTN over the last 5 quarters. So, let’s examine 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, Gregg J. Powers’ Private Capital Management has the largest position in SpartanNash Co (NASDAQ:SPTN), worth close to $24 million, accounting for 3.5% of its total 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $10.3 million position. Other members of the smart money with similar optimism comprise Jim Simons’ Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Joel Greenblatt’s Gotham Asset 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.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Highland Capital Management, led by James Dondero, assembled the biggest position in SpartanNash Co (NASDAQ:SPTN). Highland Capital Management had $0.5 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments and Robert B. Gillam’s McKinley Capital Management.
Let’s now review hedge fund activity in other stocks similar to SpartanNash Co (NASDAQ:SPTN). We will take a look at CVR Refining LP (NYSE:CVRR), Cynosure, Inc. (NASDAQ:CYNO), Installed Building Products Inc (NYSE:IBP), and Penn National Gaming, Inc (NASDAQ:PENN). All of these stocks’ market caps are closest to SPTN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVRR | 6 | 52469 | -1 |
| CYNO | 24 | 166744 | -1 |
| IBP | 13 | 53809 | -3 |
| PENN | 26 | 326612 | -1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $56 million in SPTN’s case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand CVR Refining LP (NYSE:CVRR) is the least popular one with only 6 bullish hedge fund positions. SpartanNash Co (NASDAQ:SPTN) 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 PENN might be a better candidate to consider taking a long position in.
Disclosure: None
