In this article we will check out the progression of hedge fund sentiment towards SLM Corp (NASDAQ:SLM) 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.
SLM Corp (NASDAQ:SLM) was in 27 hedge funds’ portfolios at the end of March. SLM investors should pay attention to a decrease in hedge fund interest of late. There were 39 hedge funds in our database with SLM holdings at the end of the previous quarter. Our calculations also showed that SLM 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 today’s marketplace there are a lot of indicators stock traders use to analyze publicly traded companies. A couple of the most underrated indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a healthy amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 we’re going to take a gander at the recent hedge fund action regarding SLM Corp (NASDAQ:SLM).
What does smart money think about SLM Corp (NASDAQ:SLM)?
Heading into the second quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in SLM 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.
More specifically, ValueAct Capital was the largest shareholder of SLM Corp (NASDAQ:SLM), with a stake worth $232.2 million reported as of the end of September. Trailing ValueAct Capital was Fir Tree, which amassed a stake valued at $94.4 million. Impactive Capital, Point72 Asset Management, and Renaissance Technologies 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 Impactive Capital allocated the biggest weight to SLM Corp (NASDAQ:SLM), around 14.27% of its 13F portfolio. Fir Tree is also relatively very bullish on the stock, earmarking 8.32 percent of its 13F equity portfolio to SLM.
Seeing as SLM Corp (NASDAQ:SLM) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there were a few fund managers that slashed their full holdings heading into Q4. Interestingly, Steven Tananbaum’s GoldenTree Asset Management said goodbye to the largest position of all the hedgies watched by Insider Monkey, worth about $26.2 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund cut about $17.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 12 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to SLM Corp (NASDAQ:SLM). These stocks are Grupo Aeroportuario del Pacifico (NYSE:PAC), PNM Resources, Inc. (NYSE:PNM), TechnipFMC plc (NYSE:FTI), and Ashland Global Holdings Inc.. (NYSE:ASH). This group of stocks’ market caps match SLM’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 22 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $430 million in SLM’s case. Ashland Global Holdings Inc.. (NYSE:ASH) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico (NYSE:PAC) is the least popular one with only 5 bullish hedge fund positions. SLM Corp (NASDAQ:SLM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately SLM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SLM were disappointed as the stock returned 5.4% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.