Is SEI Investments Company (SEIC) A Good Stock To Buy?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards SEI Investments Company (NASDAQ:SEIC) , and what that likely means for the prospects of the company and its stock.

Is SEI Investments Company (NASDAQ:SEIC) ready to rally soon? Prominent investors are actually turning less bullish. The number of bullish hedge fund bets were trimmed by 1 in recent months. SEIC was in 20 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with SEIC holdings at the end of the previous quarter. 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 Everest Re Group Ltd (NYSE:RE), Teleflex Incorporated (NYSE:TFX), and A. O. Smith Corporation (NYSE:AOS) to gather more data points.

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Hedge fund activity in SEI Investments Company (NASDAQ:SEIC)

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 5% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards SEIC over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Richard Chilton’s Chilton Investment Company has the most valuable position in SEI Investments Company (NASDAQ:SEIC), worth close to $88.8 million, accounting for 3.5% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $29.8 million position. Some other members of the smart money with similar optimism include Matthew Iorio’s White Elm Capital, Cliff Asness’ AQR Capital Management and Peter S. Park’s Park West Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since SEI Investments Company (NASDAQ:SEIC) has faced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few hedgies that slashed their entire stakes by the end of the third quarter. At the top of the heap, James Parsons’ Junto Capital Management sold off the biggest stake of the “upper crust” of funds studied by Insider Monkey, totaling about $36.6 million in stock, and Principal Global Investors’ Columbus Circle Investors was right behind this move, as the fund dumped about $10.8 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to SEI Investments Company (NASDAQ:SEIC). These stocks are Everest Re Group Ltd (NYSE:RE), Teleflex Incorporated (NYSE:TFX), A. O. Smith Corporation (NYSE:AOS), and Broadridge Financial Solutions, Inc. (NYSE:BR). All of these stocks’ market caps are similar to SEIC’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $453 million. That figure was $297 million in SEIC’s case. Teleflex Incorporated (NYSE:TFX) is the most popular stock in this table. On the other hand Everest Re Group Ltd (NYSE:RE) is the least popular one with only 18 bullish hedge fund positions. SEI Investments Company (NASDAQ:SEIC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TFX might be a better candidate to consider taking a long position in.

Disclosure: None