The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Steelcase Inc. (NYSE:SCS), and what that likely means for the prospects of the company and its stock.
Steelcase Inc. has seen an increase in hedge fund interest recently. 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 Dril-Quip, Inc. (NYSE:DRQ), Companhia Paranaense de Energia (ADR) (NYSE:ELP), and Portola Pharmaceuticals Inc (NASDAQ:PTLA) to gather more data points.
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Now, we’re going to go over the latest action regarding Steelcase Inc. (NYSE:SCS).
What have hedge funds been doing with Steelcase Inc. (NYSE:SCS)?
Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Steelcase Inc. (NYSE:SCS). Royce & Associates has a $33.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Spitfire Capital, managed by Julian Allen, which holds a $12.9 million position; 5.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish encompass Robert Polak’s Anchor Bolt Capital, Michael R. Weisberg’s Crestwood Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Now, specific money managers were leading the bulls’ herd. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most outsized call position in Steelcase Inc. (NYSE:SCS). Laurion Capital Management had $1.8 million invested in the company at the end of the quarter. Clint Murray’s Lodge Hill Capital also initiated a $1.7 million position during the quarter. The other funds with brand new SCS positions are Neil Chriss’s Hutchin Hill Capital, Ira Unschuld’s Brant Point Investment Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Steelcase Inc. (NYSE:SCS) but similarly valued. We will take a look at Dril-Quip, Inc. (NYSE:DRQ), Companhia Paranaense de Energia (ADR) (NYSE:ELP), Portola Pharmaceuticals Inc (NASDAQ:PTLA), and CONSOL Energy Inc. (NYSE:CNX). This group of stocks’ market values resemble SCS’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $424 million. That figure was $82 million in SCS’s case. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia (ADR) (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. Steelcase Inc. (NYSE:SCS) is not the least popular stock in this group but hedge fund interest is still below average. Still, given the increase in the total number of funds long the stock, it’s worth taking a closer look at SCS.