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Hedge Funds Aren’t Done Buying Science Applications International Corp (SAIC)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Science Applications International Corp (NYSE:SAIC) based on that data.

Science Applications International Corp (NYSE:SAIC) investors should pay attention to an increase in enthusiasm from smart money lately. Our calculations also showed that SAIC 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phill Gross of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. With all of this in mind let’s take a gander at the latest hedge fund action encompassing Science Applications International Corp (NYSE:SAIC).

Hedge fund activity in Science Applications International Corp (NYSE:SAIC)

At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the fourth quarter of 2019. On the other hand, there were a total of 28 hedge funds with a bullish position in SAIC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Citadel Investment Group held the most valuable stake in Science Applications International Corp (NYSE:SAIC), which was worth $73.9 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $40.8 million worth of shares. Horizon Asset Management, Simcoe Capital Management, and Balyasny 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 Simcoe Capital Management allocated the biggest weight to Science Applications International Corp (NYSE:SAIC), around 10.95% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, earmarking 4.92 percent of its 13F equity portfolio to SAIC.

As one would reasonably expect, specific money managers have jumped into Science Applications International Corp (NYSE:SAIC) headfirst. Sunriver Management, managed by Will Cook, assembled the most outsized position in Science Applications International Corp (NYSE:SAIC). Sunriver Management had $28.1 million invested in the company at the end of the quarter. Andrew Wellington and Jeff Keswin’s Lyrical Asset Management also made a $17.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Ira Unschuld’s Brant Point Investment Management, and Mike Vranos’s Ellington.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Science Applications International Corp (NYSE:SAIC) but similarly valued. These stocks are JOYY Inc. (NASDAQ:YY), LPL Financial Holdings Inc (NASDAQ:LPLA), Cousins Properties Incorporated (NYSE:CUZ), and Signature Bank (NASDAQ:SBNY). This group of stocks’ market values resemble SAIC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
YY 15 209246 -8
LPLA 33 747511 -8
CUZ 22 76929 10
SBNY 19 262247 -2
Average 22.25 323983 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $324 million. That figure was $372 million in SAIC’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand JOYY Inc. (NASDAQ:YY) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Science Applications International Corp (NYSE:SAIC) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on SAIC, though not to the same extent, as the stock returned 18.6% in Q2 (through the end of May) and outperformed the market as well.

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