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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about SM Energy Company (NYSE:SM)?
SM Energy Company (NYSE:SM) investors should pay attention to a decrease in hedge fund sentiment of late. Our calculations also showed that SM 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.
To most traders, hedge funds are viewed as worthless, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at present, We hone in on the upper echelon of this club, around 850 funds. It is estimated that this group of investors handle bulk of the smart money’s total asset base, and by monitoring their matchless stock picks, Insider Monkey has formulated many investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed 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 .
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. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding SM Energy Company (NYSE:SM).
How have hedgies been trading SM Energy Company (NYSE:SM)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SM over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of SM Energy Company (NYSE:SM), with a stake worth $4.7 million reported as of the end of September. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $4.7 million. D E Shaw, Renaissance Technologies, and Alyeska Investment Group 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 PDT Partners allocated the biggest weight to SM Energy Company (NYSE:SM), around 0.05% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to SM.
Since SM Energy Company (NYSE:SM) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers who sold off their full holdings by the end of the first quarter. At the top of the heap, Todd J. Kantor’s Encompass Capital Advisors said goodbye to the largest position of all the hedgies followed by Insider Monkey, comprising about $31.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $7.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SM Energy Company (NYSE:SM) but similarly valued. We will take a look at SeaChange International, Inc. (NASDAQ:SEAC), MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT), Tortoise Energy Infrastructure Corporation (NYSE:TYG), and Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI). This group of stocks’ market valuations resemble SM’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 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $20 million in SM’s case. MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 2 bullish hedge fund positions. SM Energy Company (NYSE:SM) is not the most popular stock in this group but hedge fund interest is still above 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 but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on SM as the stock returned 234% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.