Hedge Funds Cashing Out Of Stein Mart, Inc. (SMRT)

In this article you are going to find out whether hedge funds think Stein Mart, Inc. (NASDAQ:SMRT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Stein Mart, Inc. (NASDAQ:SMRT) a good investment now? Money managers are reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 1 recently. Our calculations also showed that SMRT 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). SMRT was in 3 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with SMRT positions at the end of the previous quarter.

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

According to most stock holders, hedge funds are seen as worthless, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, Our researchers hone in on the bigwigs of this group, about 850 funds. These investment experts manage most of the hedge fund industry’s total asset base, and by paying attention to their unrivaled stock picks, Insider Monkey has come up with various investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year 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 .

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the new hedge fund action surrounding Stein Mart, Inc. (NASDAQ:SMRT).

How are hedge funds trading Stein Mart, Inc. (NASDAQ:SMRT)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SMRT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SMRT A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Beryl Capital Management, managed by David Alexander Witkin, holds the biggest position in Stein Mart, Inc. (NASDAQ:SMRT). Beryl Capital Management has a $0.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Beryl Capital Management’s heels is Schonfeld Strategic Advisors, led by Ryan Tolkin (CIO), holding a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Beryl Capital Management allocated the biggest weight to Stein Mart, Inc. (NASDAQ:SMRT), around 0.04% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, designating 0.0014 percent of its 13F equity portfolio to SMRT.

Because Stein Mart, Inc. (NASDAQ:SMRT) has witnessed declining sentiment from the smart money, logic holds that there is a sect of hedge funds that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $0.1 million in stock. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $0 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Stein Mart, Inc. (NASDAQ:SMRT). These stocks are Altisource Asset Management Corp (NYSE:AAMC), Aerpio Pharmaceuticals, Inc. (NASDAQ:ARPO), Microvision, Inc. (NASDAQ:MVIS), and Nuverra Environmental Solutions Inc (NYSE:NES). All of these stocks’ market caps match SMRT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AAMC 1 657 0
ARPO 3 3113 1
MVIS 2 35 0
NES 4 9964 -1
Average 2.5 3442 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $0 million in SMRT’s case. Nuverra Environmental Solutions Inc (NYSE:NES) is the most popular stock in this table. On the other hand Altisource Asset Management Corp (NYSE:AAMC) is the least popular one with only 1 bullish hedge fund positions. Stein Mart, Inc. (NASDAQ:SMRT) 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 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately SMRT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SMRT were disappointed as the stock returned -32.6% 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.