While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Safe Bulkers, Inc. (NYSE:SB).
Is Safe Bulkers, Inc. (NYSE:SB) a good investment right now? Money managers were taking an optimistic view. The number of bullish hedge fund positions improved by 1 lately. Safe Bulkers, Inc. (NYSE:SB) was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 10. Our calculations also showed that SB isn’t among the 30 most popular stocks among hedge funds (click for Q3 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In the eyes of most market participants, hedge funds are viewed as slow, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the elite of this group, about 850 funds. Most estimates calculate that this group of people oversee the majority of the hedge fund industry’s total capital, and by following their unrivaled equity investments, Insider Monkey has deciphered numerous investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we’re going to go over the key hedge fund action surrounding Safe Bulkers, Inc. (NYSE:SB).
What have hedge funds been doing with Safe Bulkers, Inc. (NYSE:SB)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SB over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Safe Bulkers, Inc. (NYSE:SB), with a stake worth $4.8 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $0.3 million. D E Shaw, Millennium Management, and Two Sigma Advisors 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 Renaissance Technologies allocated the biggest weight to Safe Bulkers, Inc. (NYSE:SB), around 0.0048% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.0004 percent of its 13F equity portfolio to SB.
Now, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the largest position in Safe Bulkers, Inc. (NYSE:SB). Citadel Investment Group had $0 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to Safe Bulkers, Inc. (NYSE:SB). These stocks are Elevate Credit, Inc. (NYSE:ELVT), Mesa Air Group, Inc. (NASDAQ:MESA), cbdMD, Inc. (NYSE:YCBD), RR Donnelley & Sons Company (NYSE:RRD), Qualigen Therapeutics, Inc. (NASDAQ:QLGN), Lizhi Inc. (NASDAQ:LIZI), and The Goldfield Corporation (NYSE:GV). This group of stocks’ market caps resemble SB’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 5 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $6 million in SB’s case. Elevate Credit, Inc. (NYSE:ELVT) is the most popular stock in this table. On the other hand Qualigen Therapeutics, Inc. (NASDAQ:QLGN) is the least popular one with only 1 bullish hedge fund positions. Safe Bulkers, Inc. (NYSE:SB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SB is 51.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on SB as the stock returned 14.6% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.