The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Santander Consumer USA Holdings Inc (NYSE:SC).
Is SC a good stock to buy now? Hedge fund interest in Santander Consumer USA Holdings Inc (NYSE:SC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SC 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AGCO Corporation (NYSE:AGCO), Hill-Rom Holdings, Inc. (NYSE:HRC), and Federal Realty Investment Trust (NYSE:FRT) to gather more data points.
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. With all of this in mind let’s take a look at the key hedge fund action surrounding Santander Consumer USA Holdings Inc (NYSE:SC).
Do Hedge Funds Think SC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 25 hedge funds with a bullish position in SC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Windacre Partnership held the most valuable stake in Santander Consumer USA Holdings Inc (NYSE:SC), which was worth $255.1 million at the end of the third quarter. On the second spot was Canyon Capital Advisors which amassed $68.8 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and Water Street 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 Windacre Partnership allocated the biggest weight to Santander Consumer USA Holdings Inc (NYSE:SC), around 7.77% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, dishing out 2.55 percent of its 13F equity portfolio to SC.
Due to the fact that Santander Consumer USA Holdings Inc (NYSE:SC) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that elected to cut their entire stakes heading into Q4. Interestingly, Lee Ainslie’s Maverick Capital said goodbye to the largest position of the 750 funds monitored by Insider Monkey, totaling close to $1.3 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund said goodbye to about $1.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Santander Consumer USA Holdings Inc (NYSE:SC) but similarly valued. These stocks are AGCO Corporation (NYSE:AGCO), Hill-Rom Holdings, Inc. (NYSE:HRC), Federal Realty Investment Trust (NYSE:FRT), Syneos Health, Inc. (NASDAQ:SYNH), Bausch Health Companies (NYSE:BHC), ANGI Homeservices Inc (NASDAQ:ANGI), and Hanesbrands Inc. (NYSE:HBI). This group of stocks’ market caps are similar to SC’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 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $581 million. That figure was $429 million in SC’s case. ANGI Homeservices Inc (NASDAQ:ANGI) is the most popular stock in this table. On the other hand Federal Realty Investment Trust (NYSE:FRT) is the least popular one with only 14 bullish hedge fund positions. Santander Consumer USA Holdings Inc (NYSE:SC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SC is 32.9. 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 SC as the stock returned 20.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.