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Hedge Funds Aren’t Impressed By Shaw Communications Inc (SJR)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Shaw Communications Inc (NYSE:SJR) based on that data and determine whether they were really smart about the stock.

Shaw Communications Inc (NYSE:SJR) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare SJR to other stocks including Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Trimble Inc. (NASDAQ:TRMB), and ASE Technology Holding Co., Ltd. (NYSE:ASX) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at present, Our researchers look at the leaders of this club, approximately 850 funds. These investment experts handle the majority of all hedge funds’ total capital, and by watching their finest stock picks, Insider Monkey has identified several investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped 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 .

Steven Tananbaum - GoldenTree Asset Management

Steven Tananbaum of GoldenTree Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s analyze the new hedge fund action encompassing Shaw Communications Inc (NYSE:SJR).

Hedge fund activity in Shaw Communications Inc (NYSE:SJR)

Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in SJR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Shaw Communications Inc (NYSE:SJR), which was worth $70.9 million at the end of the third quarter. On the second spot was GoldenTree Asset Management which amassed $22.7 million worth of shares. Citadel Investment Group, Two Sigma Advisors, and D E Shaw 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 GoldenTree Asset Management allocated the biggest weight to Shaw Communications Inc (NYSE:SJR), around 4.2% of its 13F portfolio. Waratah Capital Advisors is also relatively very bullish on the stock, setting aside 0.24 percent of its 13F equity portfolio to SJR.

Since Shaw Communications Inc (NYSE:SJR) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that decided to sell off their entire stakes last quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $6.7 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund sold off about $1.5 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Shaw Communications Inc (NYSE:SJR) but similarly valued. These stocks are Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Trimble Inc. (NASDAQ:TRMB), ASE Technology Holding Co., Ltd. (NYSE:ASX), and Alleghany Corporation (NYSE:Y). This group of stocks’ market caps are closest to SJR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NBIX 38 1054891 -4
TRMB 20 891932 -10
ASX 9 145541 -1
Y 25 268976 1
Average 23 590335 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $152 million in SJR’s case. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 9 bullish hedge fund positions. Shaw Communications Inc (NYSE:SJR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately SJR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SJR investors were disappointed as the stock returned 2.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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