Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Seaboard Corporation (NYSEAMEX:SEB).
Hedge fund interest in Seaboard Corporation (NYSEAMEX:SEB) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SEB to other stocks including Floor & Decor Holdings, Inc. (NYSE:FND), Empire State Realty Trust Inc (NYSE:ESRT), and Liberty Global plc (NASDAQ:LBTYA) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are assumed to be unimportant, old investment tools of the past. While there are over 8000 funds with their doors open today, We look at the leaders of this club, approximately 750 funds. Most estimates calculate that this group of people have their hands on the majority of all hedge funds’ total asset base, and by paying attention to their unrivaled equity investments, Insider Monkey has deciphered several investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action surrounding Seaboard Corporation (NYSEAMEX:SEB).
What have hedge funds been doing with Seaboard Corporation (NYSEAMEX:SEB)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in SEB a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Kahn Brothers was the largest shareholder of Seaboard Corporation (NYSEAMEX:SEB), with a stake worth $57.8 million reported as of the end of September. Trailing Kahn Brothers was Renaissance Technologies, which amassed a stake valued at $30.9 million. Sabrepoint Capital, Rubric Capital Management, and Third Avenue 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 Sabrepoint Capital allocated the biggest weight to Seaboard Corporation (NYSEAMEX:SEB), around 12.08% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 7.26 percent of its 13F equity portfolio to SEB.
Judging by the fact that Seaboard Corporation (NYSEAMEX:SEB) has faced falling interest from the smart money, logic holds that there were a few hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dropped the biggest investment of all the hedgies watched by Insider Monkey, comprising an estimated $2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace was right behind this move, as the fund sold off about $0.3 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Seaboard Corporation (NYSEAMEX:SEB) but similarly valued. We will take a look at Floor & Decor Holdings, Inc. (NYSE:FND), Empire State Realty Trust Inc (NYSE:ESRT), Liberty Global plc (NASDAQ:LBTYA), and Horizon Pharma Public Limited Company (NASDAQ:HZNP). This group of stocks’ market values are closest to SEB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FND | 23 | 471890 | 2 |
| ESRT | 9 | 102681 | -3 |
| LBTYA | 27 | 1291972 | 0 |
| HZNP | 32 | 1379525 | -2 |
| Average | 22.75 | 811517 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $812 million. That figure was $148 million in SEB’s case. Horizon Pharma Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Empire State Realty Trust Inc (NYSE:ESRT) is the least popular one with only 9 bullish hedge fund positions. Seaboard Corporation (NYSEAMEX:SEB) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SEB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SEB investors were disappointed as the stock returned -6% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
