At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SPX Corporation (NYSE:SPXC) at the end of the second quarter and determine whether the smart money was really smart about this stock.
SPX Corporation (NYSE:SPXC) investors should pay attention to an increase in hedge fund interest lately. SPX Corporation (NYSE:SPXC) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. There were 14 hedge funds in our database with SPXC positions at the end of the first quarter. Our calculations also showed that SPXC 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.
According to most market participants, hedge funds are assumed to be underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the masters of this club, around 850 funds. These hedge fund managers oversee the lion’s share of the hedge fund industry’s total asset base, and by observing their first-class stock picks, Insider Monkey has unearthed numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually 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, 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 are checking out this junior gold mining stock and 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the latest hedge fund action surrounding SPX Corporation (NYSE:SPXC).
Hedge fund activity in SPX Corporation (NYSE:SPXC)
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SPXC over the last 20 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.
When looking at the institutional investors followed by Insider Monkey, Corsair Capital Management, managed by Jay Petschek and Steven Major, holds the most valuable position in SPX Corporation (NYSE:SPXC). Corsair Capital Management has a $14.9 million position in the stock, comprising 6.1% of its 13F portfolio. Coming in second is Frederick DiSanto of Ancora Advisors, with a $6.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Renaissance Technologies, Paul Marshall and Ian Wace’s Marshall Wace LLP and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Corsair Capital Management allocated the biggest weight to SPX Corporation (NYSE:SPXC), around 6.11% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 0.99 percent of its 13F equity portfolio to SPXC.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in SPX Corporation (NYSE:SPXC). Marshall Wace LLP had $3.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $1.1 million position during the quarter. The other funds with brand new SPXC positions are Robert Vincent McHugh’s Jade Capital Advisors, Dmitry Balyasny’s Balyasny Asset Management, and Mark Kleiman’s Factorial Partners.
Let’s now review hedge fund activity in other stocks similar to SPX Corporation (NYSE:SPXC). These stocks are Greif, Inc. (NYSE:GEF), Badger Meter, Inc. (NYSE:BMI), Summit Materials Inc (NYSE:SUM), Micro Focus Intl PLC (NYSE:MFGP), Beacon Roofing Supply, Inc. (NASDAQ:BECN), Sandstorm Gold Ltd. (NYSE:SAND), and Hancock Whitney Corporation (NASDAQ:HWC). All of these stocks’ market caps are closest to SPXC’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 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $44 million in SPXC’s case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand Micro Focus Intl PLC (NYSE:MFGP) is the least popular one with only 13 bullish hedge fund positions. SPX Corporation (NYSE:SPXC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SPXC is 56.5. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on SPXC as the stock returned 12.7% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.