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Here is What Hedge Funds Think About Boston Beer Co Inc (SAM)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Boston Beer Co Inc (NYSE:SAM)? The smart money sentiment can provide an answer to this question.

Boston Beer Co Inc (NYSE:SAM) investors should pay attention to a decrease in hedge fund interest recently. SAM was in 24 hedge funds’ portfolios at the end of the third quarter of 2015. There were 27 hedge funds in our database with SAM holdings at the end of the previous quarter. At the end of this article we will also compare SAM to other stocks including Landstar System, Inc. (NASDAQ:LSTR), Vector Group Ltd (NYSE:VGR), and DCP Midstream Partners, LP (NYSE:DPM) to get a better sense of its popularity.

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Keeping this in mind, we’re going to take a look at the key action encompassing Boston Beer Co Inc (NYSE:SAM).

What does the smart money think about Boston Beer Co Inc (NYSE:SAM)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Eashwar Krishnan’s Tybourne Capital Management has the number one position in Boston Beer Co Inc (NYSE:SAM), worth close to $116.5 million, accounting for 8.2% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, led by Ken Fisher, holding a $60.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism include Joel Greenblatt’s Gotham Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Jim Simons’ Renaissance Technologies.

Because Boston Beer Co Inc (NYSE:SAM) has faced bearish sentiment from the smart money, we can see that there exists a select few fund managers who sold off their entire stakes in the third quarter. Interestingly, Michael R. Weisberg’s Crestwood Capital Management cut the biggest stake of the 700 funds tracked by Insider Monkey, valued at close to $10.9 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $7.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Boston Beer Co Inc (NYSE:SAM) but similarly valued. These stocks are Landstar System, Inc. (NASDAQ:LSTR), Vector Group Ltd (NYSE:VGR), DCP Midstream Partners, LP (NYSE:DPM), and Houghton Mifflin Harcourt Co (NASDAQ:HMHC). This group of stocks’ market valuations match SAM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LSTR 19 222178 -2
VGR 17 233591 -2
DPM 10 14338 5
HMHC 37 1033218 3

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $271 million in SAM’s case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand DCP Midstream Partners, LP (NYSE:DPM) is the least popular one with only 10 bullish hedge fund positions. Boston Beer Co Inc (NYSE:SAM) 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. In this regard HMHC might be a better candidate to consider a long position.

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