The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Sanderson Farms, Inc. (NASDAQ:SAFM).
Sanderson Farms, Inc. was in 18 hedge funds’ portfolios at the end of September. SAFM investors should be aware of a decrease in activity from the world’s largest hedge funds recently. There were 21 hedge funds in our database with SAFM positions at the end of the previous quarter. At the end of this article we will also compare SAFM to other stocks including Acxiom Corporation (NASDAQ:ACXM), WMS Industries Inc. (NYSE:WMS), and Revlon Inc (NYSE:REV) to get a better sense of its popularity.
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Now, let’s take a look at the latest action encompassing Sanderson Farms, Inc. (NASDAQ:SAFM).
Hedge fund activity in Sanderson Farms, Inc. (NASDAQ:SAFM)
Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Sanderson Farms, Inc. (NASDAQ:SAFM), worth close to $72.9 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Joel Greenblatt of Gotham Asset Management, with a $67.7 million position; 0.7% of its 13F portfolio is allocated to the company. Some other peers that are bullish encompass Carl Goldsmith and Scott Klein’s Beach Point Capital Management, D E Shaw and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Seeing as Sanderson Farms, Inc. (NASDAQ:SAFM) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Ricky Sandler’s Eminence Capital dumped the largest stake of all the hedgies watched by Insider Monkey, worth about $24.7 million in stock. John Smith Clark’s fund, Southpoint Capital Advisors, also sold off its stock, about $7.5 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Sanderson Farms, Inc. (NASDAQ:SAFM). We will take a look at Acxiom Corporation (NASDAQ:ACXM), WMS Industries Inc. (NYSE:WMS), Revlon Inc (NYSE:REV), and American States Water Co (NYSE:AWR). This group of stocks’ market valuations are closest to SAFM’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $270 million in SAFM’s case. Acxiom Corporation (NASDAQ:ACXM) is the most popular stock in this table. On the other hand American States Water Co (NYSE:AWR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Sanderson Farms, Inc. (NASDAQ:SAFM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.