We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards South State Corporation (NASDAQ:SSB) and determine whether hedge funds skillfully traded this stock.
South State Corporation (NASDAQ:SSB) has seen an increase in activity from the world’s largest hedge funds of late. South State Corporation (NASDAQ:SSB) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistics is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 12 hedge funds in our database with SSB holdings at the end of March. Our calculations also showed that SSB isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
To most shareholders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our researchers look at the crème de la crème of this club, about 850 funds. It is estimated that this group of investors oversee bulk of all hedge funds’ total asset base, and by paying attention to their inimitable stock picks, Insider Monkey has formulated various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced 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 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s take a look at the fresh hedge fund action encompassing South State Corporation (NASDAQ:SSB).
How are hedge funds trading South State Corporation (NASDAQ:SSB)?
At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the first quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in SSB a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of South State Corporation (NASDAQ:SSB), with a stake worth $31.3 million reported as of the end of September. Trailing Select Equity Group was Renaissance Technologies, which amassed a stake valued at $9.5 million. Arrowstreet Capital, Royce & Associates, and Impax Asset 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 Mendon Capital Advisors allocated the biggest weight to South State Corporation (NASDAQ:SSB), around 1.46% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to SSB.
Now, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in South State Corporation (NASDAQ:SSB). Arrowstreet Capital had $6.8 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new SSB investors: Ian Simm’s Impax Asset Management, Israel Englander’s Millennium Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as South State Corporation (NASDAQ:SSB) but similarly valued. We will take a look at Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), Freshpet Inc (NASDAQ:FRPT), Spire Inc. (NYSE:SR), Glacier Bancorp, Inc. (NASDAQ:GBCI), Iridium Communications Inc. (NASDAQ:IRDM), World Wrestling Entertainment, Inc. (NYSE:WWE), and W.R. Grace & Co. (NYSE:GRA). This group of stocks’ market caps are similar to SSB’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 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $80 million in SSB’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) is the least popular one with only 11 bullish hedge fund positions. South State Corporation (NASDAQ:SSB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSB is 63.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately SSB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SSB were disappointed as the stock returned -1.1% 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.