We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Sanmina Corporation (NASDAQ:SANM).
Hedge fund interest in Sanmina Corporation (NASDAQ:SANM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SANM to other stocks including The Simply Good Foods Company (NASDAQ:SMPL), Summit Materials Inc (NYSE:SUM), and Urban Edge Properties (NYSE:UE) to get a better sense of its popularity. Our calculations also showed that SANM isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the latest hedge fund action regarding Sanmina Corporation (NASDAQ:SANM).
Hedge fund activity in Sanmina Corporation (NASDAQ:SANM)
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SANM over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Diamond Hill Capital was the largest shareholder of Sanmina Corporation (NASDAQ:SANM), with a stake worth $85.9 million reported as of the end of March. Trailing Diamond Hill Capital was Renaissance Technologies, which amassed a stake valued at $33 million. D E Shaw, Royce & Associates, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Sanmina Corporation (NASDAQ:SANM) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedgies that decided to sell off their full holdings last quarter. It’s worth mentioning that Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital cut the biggest position of the 750 funds followed by Insider Monkey, totaling close to $3.3 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund dropped about $0.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Sanmina Corporation (NASDAQ:SANM). We will take a look at The Simply Good Foods Company (NASDAQ:SMPL), Summit Materials Inc (NYSE:SUM), Urban Edge Properties (NYSE:UE), and National Beverage Corp. (NASDAQ:FIZZ). This group of stocks’ market caps match SANM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMPL | 23 | 243876 | 1 |
| SUM | 22 | 557034 | 0 |
| UE | 12 | 121836 | -2 |
| FIZZ | 22 | 261569 | 1 |
| Average | 19.75 | 296079 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was $194 million in SANM’s case. The Simply Good Foods Company (NASDAQ:SMPL) is the most popular stock in this table. On the other hand Urban Edge Properties (NYSE:UE) is the least popular one with only 12 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 calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on SANM as the stock returned 6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
