Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Sanmina Corporation (NASDAQ:SANM) in this article.
Is SANM a good stock to buy now? Prominent investors were cutting their exposure. The number of long hedge fund positions dropped by 5 recently. Sanmina Corporation (NASDAQ:SANM) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 23. Our calculations also showed that SANM 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 let’s go over the latest hedge fund action surrounding Sanmina Corporation (NASDAQ:SANM).
Do Hedge Funds Think SANM Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SANM over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Diamond Hill Capital held the most valuable stake in Sanmina Corporation (NASDAQ:SANM), which was worth $43.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $32.3 million worth of shares. D E Shaw, Royce & Associates, and Arrowstreet Capital 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 Invenomic Capital Management allocated the biggest weight to Sanmina Corporation (NASDAQ:SANM), around 0.43% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, designating 0.24 percent of its 13F equity portfolio to SANM.
Since Sanmina Corporation (NASDAQ:SANM) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group dropped the biggest investment of the 750 funds tracked by Insider Monkey, comprising close to $5.7 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $1.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sanmina Corporation (NASDAQ:SANM) but similarly valued. We will take a look at Rogers Corporation (NYSE:ROG), Prestige Consumer Healthcare Inc. (NYSE:PBH), GrafTech International Ltd. (NYSE:EAF), TC Pipelines, LP (NYSE:TCP), Cubic Corporation (NYSE:CUB), PRA Group, Inc. (NASDAQ:PRAA), and SPX FLOW, Inc. (NYSE:FLOW). This group of stocks’ market values resemble SANM’s market value.
|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 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $135 million in SANM’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand TC Pipelines, LP (NYSE:TCP) is the least popular one with only 3 bullish hedge fund positions. Sanmina Corporation (NASDAQ:SANM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SANM is 45.7. 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 December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on SANM as the stock returned 17.3% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.