The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Sonos, Inc. (NASDAQ:SONO) based on those filings.
Sonos, Inc. (NASDAQ:SONO) shareholders have witnessed an increase in enthusiasm from smart money recently. Our calculations also showed that SONO 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind we’re going to review the latest hedge fund action encompassing Sonos, Inc. (NASDAQ:SONO).
How are hedge funds trading Sonos, Inc. (NASDAQ:SONO)?
Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the fourth quarter of 2019. On the other hand, there were a total of 22 hedge funds with a bullish position in SONO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Trigran Investments, managed by Douglas T. Granat, holds the most valuable position in Sonos, Inc. (NASDAQ:SONO). Trigran Investments has a $25.3 million position in the stock, comprising 5.5% of its 13F portfolio. On Trigran Investments’s heels is Renaissance Technologies, which holds a $23 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include D. E. Shaw’s D E Shaw, David Brown’s Hawk Ridge Management and C. Ashton Newhall and James Lim’s Greenspring Associates. In terms of the portfolio weights assigned to each position Greenspring Associates allocated the biggest weight to Sonos, Inc. (NASDAQ:SONO), around 6.21% of its 13F portfolio. Trigran Investments is also relatively very bullish on the stock, dishing out 5.55 percent of its 13F equity portfolio to SONO.
Consequently, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Sonos, Inc. (NASDAQ:SONO). Marshall Wace LLP had $10.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Diehl’s Adams Street Partners, Sahm Adrangi’s Kerrisdale Capital, and J. Daniel Plants’s Voce Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sonos, Inc. (NASDAQ:SONO) but similarly valued. These stocks are Carpenter Technology Corporation (NYSE:CRS), TPG Specialty Lending Inc (NYSE:TSLX), Methanex Corporation (NASDAQ:MEOH), and Boise Cascade Co (NYSE:BCC). All of these stocks’ market caps match SONO’s market cap.
|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 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $140 million in SONO’s case. Boise Cascade Co (NYSE:BCC) is the most popular stock in this table. On the other hand Methanex Corporation (NASDAQ:MEOH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Sonos, Inc. (NASDAQ:SONO) 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 returned 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 SONO as the stock returned 28.1% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.