Did Hedge Funds Make The Right Call On SEI Investments Company (SEIC) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded SEI Investments Company (NASDAQ:SEIC) and determine whether the smart money was really smart about this stock.

SEI Investments Company (NASDAQ:SEIC) shareholders have witnessed an increase in hedge fund sentiment recently. Our calculations also showed that SEIC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are assumed to be slow, outdated investment tools of years past. While there are greater than 8000 funds with their doors open at present, We hone in on the moguls of this group, about 850 funds. These money managers handle the majority of the hedge fund industry’s total asset base, and by following their best equity investments, Insider Monkey has spotted a few investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Alex Litowitz Magnetar Capital

Alex Litowitz of Magnetar Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the recent hedge fund action regarding SEI Investments Company (NASDAQ:SEIC).

Hedge fund activity in SEI Investments Company (NASDAQ:SEIC)

Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in SEIC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in SEI Investments Company (NASDAQ:SEIC) was held by Renaissance Technologies, which reported holding $41.5 million worth of stock at the end of September. It was followed by Millennium Management with a $29.8 million position. Other investors bullish on the company included Junto Capital Management, Arrowstreet Capital, and Royce & Associates. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to SEI Investments Company (NASDAQ:SEIC), around 7.39% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, setting aside 3.26 percent of its 13F equity portfolio to SEIC.

As industrywide interest jumped, specific money managers have jumped into SEI Investments Company (NASDAQ:SEIC) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in SEI Investments Company (NASDAQ:SEIC). Millennium Management had $29.8 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also initiated a $23.7 million position during the quarter. The following funds were also among the new SEIC investors: Ravi Chopra’s Azora Capital, John W. Rogers’s Ariel Investments, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SEI Investments Company (NASDAQ:SEIC) but similarly valued. We will take a look at The Toro Company (NYSE:TTC), Chemed Corporation (NYSE:CHE), Vornado Realty Trust (NYSE:VNO), and WABCO Holdings Inc. (NYSE:WBC). All of these stocks’ market caps resemble SEIC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TTC 24 675646 1
CHE 25 381017 3
VNO 25 224296 -6
WBC 32 1395171 -2
Average 26.5 669033 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $669 million. That figure was $255 million in SEIC’s case. WABCO Holdings Inc. (NYSE:WBC) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks SEI Investments Company (NASDAQ:SEIC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately SEIC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SEIC were disappointed as the stock returned 19.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.