With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI).
Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that SHI 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Agora, Inc. (NASDAQ:API), Manpowergroup Inc (NYSE:MAN), and Cousins Properties Incorporated (NYSE:CUZ) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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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 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. Now we’re going to take a look at the key hedge fund action regarding Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI).
What have hedge funds been doing with Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in SHI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) was held by Renaissance Technologies, which reported holding $9.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $0.4 million position. The only other hedge fund that is bullish on the company was Bourgeon Capital.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Arrowstreet Capital).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) but similarly valued. We will take a look at Agora, Inc. (NASDAQ:API), Manpowergroup Inc (NYSE:MAN), Cousins Properties Incorporated (NYSE:CUZ), PVH Corp (NYSE:PVH), Stamps.com Inc. (NASDAQ:STMP), Simpson Manufacturing Co, Inc. (NYSE:SSD), and Bandwidth Inc. (NASDAQ:BAND). All of these stocks’ market caps are closest to SHI’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 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $360 million. That figure was $10 million in SHI’s case. Manpowergroup Inc (NYSE:MAN) is the most popular stock in this table. On the other hand Cousins Properties Incorporated (NYSE:CUZ) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is even less popular than CUZ. Our overall hedge fund sentiment score for SHI is 20. 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. Hedge funds clearly dropped the ball on SHI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on SHI as the stock returned 19.8% since Q3 (through November 23rd) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.