How Shaw Communications Inc (USA) (SJR) Stacks Up Against Its Peers

How do we determine whether Shaw Communications Inc (USA) (NYSE:SJR) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Shaw Communications Inc (USA) (NYSE:SJR) has seen a decrease in hedge fund interest recently. SJR was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. There were 12 hedge funds in our database with SJR positions at the end of the previous quarter. At the end of this article we will also compare SJR to other stocks including Tesoro Corporation (NYSE:TSO), Autoliv Inc. (NYSE:ALV), and Ally Financial Inc (NYSE:ALLY) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, we’re going to take a gander at the latest action encompassing Shaw Communications Inc (USA) (NYSE:SJR).

What have hedge funds been doing with Shaw Communications Inc (USA) (NYSE:SJR)?

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2016. On the other hand, there were a total of 16 hedge funds with a bullish position in SJR at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Daniel Bubis’s Tetrem Capital Management has the largest position in Shaw Communications Inc (USA) (NYSE:SJR), worth close to $57.2 million, corresponding to 2.1% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $25.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Jim Simons’s Renaissance Technologies, one of the largest hedge funds in the world, J. Alan Reid, Jr.’s Forward Management and D. E. Shaw’s D E Shaw. We should note that Forward Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Shaw Communications Inc (USA) (NYSE:SJR) has weathered bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies who sold off their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cashed in the largest stake of all the investors tracked by Insider Monkey, worth an estimated $15.7 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund said goodbye to about $5.4 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to Shaw Communications Inc (USA) (NYSE:SJR). We will take a look at Tesoro Corporation (NYSE:TSO), Autoliv Inc. (NYSE:ALV), Ally Financial Inc (NYSE:ALLY), and Harley-Davidson, Inc. (NYSE:HOG). This group of stocks’ market valuations are similar to SJR’s market valuation.

As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1131 million. That figure was $115 million in SJR’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Autoliv Inc. (NYSE:ALV) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Shaw Communications Inc (USA) (NYSE:SJR) is even less popular than ALV. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.