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 Sirius International Insurance Group, Ltd. (NASDAQ:SG) in this article.
Is Sirius International Insurance (SG) a good stock to buy now? The best stock pickers were becoming more confident. The number of long hedge fund positions advanced by 4 lately. Sirius International Insurance Group, Ltd. (NASDAQ:SG) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 16. Our calculations also showed that SG 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). There were 2 hedge funds in our database with SG holdings at the end of June.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 glance at the fresh hedge fund action encompassing Sirius International Insurance Group, Ltd. (NASDAQ:SG).
Hedge fund activity in Sirius International Insurance Group, Ltd. (NASDAQ:SG)
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in SG a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Ursa Fund Management was the largest shareholder of Sirius International Insurance Group, Ltd. (NASDAQ:SG), with a stake worth $3.5 million reported as of the end of September. Trailing Ursa Fund Management was MFP Investors, which amassed a stake valued at $2.1 million. Havens Advisors, Odey Asset Management Group, and Levin Easterly Partners 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 Havens Advisors allocated the biggest weight to Sirius International Insurance Group, Ltd. (NASDAQ:SG), around 1.84% of its 13F portfolio. Ursa Fund Management is also relatively very bullish on the stock, designating 1.8 percent of its 13F equity portfolio to SG.
Now, key hedge funds have jumped into Sirius International Insurance Group, Ltd. (NASDAQ:SG) headfirst. Ursa Fund Management, managed by Andrew Hahn, initiated the largest position in Sirius International Insurance Group, Ltd. (NASDAQ:SG). Ursa Fund Management had $3.5 million invested in the company at the end of the quarter. Nancy Havens-Hasty’s Havens Advisors also made a $2 million investment in the stock during the quarter. The following funds were also among the new SG investors: Crispin Odey’s Odey Asset Management Group and Mark Kleiman’s Factorial Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sirius International Insurance Group, Ltd. (NASDAQ:SG) but similarly valued. These stocks are Gray Television, Inc. (NYSE:GTN), Sangamo Therapeutics, Inc. (NASDAQ:SGMO), So-Young International Inc. (NASDAQ:SY), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Silicon Motion Technology Corp. (NASDAQ:SIMO), and Hercules Capital Inc (NYSE:HTGC). All of these stocks’ market caps are similar to SG’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 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $9 million in SG’s case. Sangamo Therapeutics, Inc. (NASDAQ:SGMO) is the most popular stock in this table. On the other hand So-Young International Inc. (NASDAQ:SY) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Sirius International Insurance Group, Ltd. (NASDAQ:SG) is even less popular than SY. Our overall hedge fund sentiment score for SG is 20.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards SG. Our calculations showed that the top 20 most popular hedge fund stocks 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 November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately SG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SG investors were disappointed as the stock returned 1.6% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.