We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards SiteOne Landscape Supply, Inc. (NYSE:SITE) and determine whether hedge funds skillfully traded this stock.
SiteOne Landscape Supply, Inc. (NYSE:SITE) has experienced an increase in enthusiasm from smart money of late. SITE was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with SITE positions at the end of the previous quarter. Our calculations also showed that SITE 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 market participants, hedge funds are assumed to be underperforming, old investment tools of years past. While there are more than 8000 funds trading at present, Our researchers choose to focus on the moguls of this group, around 850 funds. It is estimated that this group of investors administer bulk of all hedge funds’ total asset base, and by shadowing their best picks, Insider Monkey has spotted numerous investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year 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 .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a glance at the fresh hedge fund action encompassing SiteOne Landscape Supply, Inc. (NYSE:SITE).
Hedge fund activity in SiteOne Landscape Supply, Inc. (NYSE:SITE)
Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the fourth quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in SITE a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Greenhouse Funds, managed by Joe Milano, holds the most valuable position in SiteOne Landscape Supply, Inc. (NYSE:SITE). Greenhouse Funds has a $22.7 million position in the stock, comprising 5.5% of its 13F portfolio. The second largest stake is held by D E Shaw, led by D. E. Shaw, holding a $19.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain Renaissance Technologies, Richard Driehaus’s Driehaus Capital and Joel Greenblatt’s Gotham Asset Management. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to SiteOne Landscape Supply, Inc. (NYSE:SITE), around 5.53% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.33 percent of its 13F equity portfolio to SITE.
Consequently, specific money managers were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the largest position in SiteOne Landscape Supply, Inc. (NYSE:SITE). Two Sigma Advisors had $2.6 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new SITE investors: Paul Tudor Jones’s Tudor Investment Corp, Alec Litowitz and Ross Laser’s Magnetar Capital, and Philippe Laffont’s Coatue Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SiteOne Landscape Supply, Inc. (NYSE:SITE) but similarly valued. These stocks are Intercorp Financial Services Inc. (NYSE:IFS), Change Healthcare Inc. (NASDAQ:CHNG), Nutanix, Inc. (NASDAQ:NTNX), and Mattel, Inc. (NASDAQ:MAT). This group of stocks’ market caps match SITE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $86 million in SITE’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 2 bullish hedge fund positions. SiteOne Landscape Supply, Inc. (NYSE:SITE) is not the least popular stock in this group but hedge fund interest is still below average. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on SITE as the stock returned 70.1% since the end of March and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.