Hedge Funds Are Betting On Summer Infant, Inc. (SUMR)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Summer Infant, Inc. (NASDAQ:SUMR).

Summer Infant, Inc. (NASDAQ:SUMR) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that SUMR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Nelson Obus of Wynnefield Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s check out the latest hedge fund action regarding Summer Infant, Inc. (NASDAQ:SUMR).

How are hedge funds trading Summer Infant, Inc. (NASDAQ:SUMR)?

Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SUMR over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Wynnefield Capital, managed by Nelson Obus, holds the number one position in Summer Infant, Inc. (NASDAQ:SUMR). Wynnefield Capital has a $2.4 million position in the stock, comprising 1.3% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies holding a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to Summer Infant, Inc. (NASDAQ:SUMR), around 1.27% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0001 percent of its 13F equity portfolio to SUMR.

Consequently, key hedge funds have jumped into Summer Infant, Inc. (NASDAQ:SUMR) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Summer Infant, Inc. (NASDAQ:SUMR). Millennium Management had $0 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks similar to Summer Infant, Inc. (NASDAQ:SUMR). We will take a look at Medigus Ltd. (NASDAQ:MDGS), Advaxis, Inc. (NASDAQ:ADXS), Reebonz Holding Limited (NASDAQ:RBZ), and Blonder Tongue Laboratories, Inc. (NYSE:BDR). This group of stocks’ market values are closest to SUMR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MDGS 4 1004 0
ADXS 6 1082 2
RBZ 1 13 0
BDR 1 47 -1
Average 3 537 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $3 million in SUMR’s case. Advaxis, Inc. (NASDAQ:ADXS) is the most popular stock in this table. On the other hand Reebonz Holding Limited (NASDAQ:RBZ) is the least popular one with only 1 bullish hedge fund positions. Summer Infant, Inc. (NASDAQ:SUMR) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SUMR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SUMR were disappointed as the stock returned -8.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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