In this article we will check out the progression of hedge fund sentiment towards SiteOne Landscape Supply, Inc. (NYSE:SITE) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
SiteOne Landscape Supply, Inc. (NYSE:SITE) was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. SITE investors should pay attention to an increase in activity from the world’s largest hedge funds recently. 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the latest hedge fund action regarding SiteOne Landscape Supply, Inc. (NYSE:SITE).
How have hedgies been trading SiteOne Landscape Supply, Inc. (NYSE:SITE)?
At the end of the first quarter, 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. The graph below displays the number of hedge funds with bullish position in SITE over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Greenhouse Funds was the largest shareholder of SiteOne Landscape Supply, Inc. (NYSE:SITE), with a stake worth $22.7 million reported as of the end of September. Trailing Greenhouse Funds was D E Shaw, which amassed a stake valued at $19.5 million. Renaissance Technologies, Driehaus Capital, and Gotham Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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, designating 0.33 percent of its 13F equity portfolio to SITE.
Consequently, key hedge funds have jumped into SiteOne Landscape Supply, Inc. (NYSE:SITE) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest 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 initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Alec Litowitz and Ross Laser’s Magnetar Capital, and Philippe Laffont’s Coatue Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SiteOne Landscape Supply, Inc. (NYSE:SITE) but similarly valued. We will take a look at 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 valuations resemble SITE’s market valuation.
|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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on SITE as the stock returned 52.6% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.