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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Scholastic Corp (NASDAQ:SCHL)?
Is SCHL a good stock to buy now? The smart money was in a bullish mood. The number of long hedge fund bets rose by 1 lately. Scholastic Corp (NASDAQ:SCHL) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 17. Our calculations also showed that SCHL 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.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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. Now we’re going to analyze the key hedge fund action surrounding Scholastic Corp (NASDAQ:SCHL).
Do Hedge Funds Think SCHL Is A Good Stock To Buy Now?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in SCHL over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fairpointe Capital was the largest shareholder of Scholastic Corp (NASDAQ:SCHL), with a stake worth $11.5 million reported as of the end of September. Trailing Fairpointe Capital was Arrowstreet Capital, which amassed a stake valued at $7.3 million. Royce & Associates, Citadel Investment Group, and D E Shaw 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 Fairpointe Capital allocated the biggest weight to Scholastic Corp (NASDAQ:SCHL), around 1.84% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to SCHL.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Scholastic Corp (NASDAQ:SCHL) headfirst. Paloma Partners, managed by Donald Sussman, initiated the largest position in Scholastic Corp (NASDAQ:SCHL). Paloma Partners had $0.7 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.2 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Scholastic Corp (NASDAQ:SCHL) but similarly valued. We will take a look at GoPro Inc (NASDAQ:GPRO), Enterprise Financial Services Corp (NASDAQ:EFSC), Partner Communications Company Ltd (NASDAQ:PTNR), ChipMOS Technologies Inc (NASDAQ:IMOS), CTS Corporation (NYSE:CTS), Tactile Systems Technology, Inc. (NASDAQ:TCMD), and Zumiez Inc. (NASDAQ:ZUMZ). This group of stocks’ market valuations match SCHL’s market valuation.
|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 11 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $41 million in SCHL’s case. Zumiez Inc. (NASDAQ:ZUMZ) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 bullish hedge fund positions. Scholastic Corp (NASDAQ:SCHL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SCHL is 64.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on SCHL as the stock returned 23.1% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.