Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Skyline Champion Corporation (NYSE:SKY) based on that data.
Skyline Champion Corporation (NYSE:SKY) has experienced a decrease in hedge fund sentiment of late. SKY was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with SKY positions at the end of the previous quarter. Our calculations also showed that SKY isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 58 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.
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the fresh hedge fund action regarding Skyline Champion Corporation (NYSE:SKY).
Hedge fund activity in Skyline Champion Corporation (NYSE:SKY)
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in SKY a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, MAK Capital One was the largest shareholder of Skyline Champion Corporation (NYSE:SKY), with a stake worth $52.8 million reported as of the end of September. Trailing MAK Capital One was Adage Capital Management, which amassed a stake valued at $28.5 million. Driehaus Capital, Newtyn Management, and 12th Street Asset Management 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 MAK Capital One allocated the biggest weight to Skyline Champion Corporation (NYSE:SKY), around 46.6% of its 13F portfolio. Venator Capital Management is also relatively very bullish on the stock, dishing out 4.12 percent of its 13F equity portfolio to SKY.
Judging by the fact that Skyline Champion Corporation (NYSE:SKY) has faced declining sentiment from the smart money, it’s safe to say that there exists a select few fund managers that slashed their full holdings in the first quarter. Intriguingly, Mark Coe’s Intrinsic Edge Capital sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising about $13.5 million in stock. Gregg Moskowitz’s fund, Interval Partners, also dumped its stock, about $3.5 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds in the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Skyline Champion Corporation (NYSE:SKY) but similarly valued. We will take a look at Sturm, Ruger & Company (NYSE:RGR), Service Properties Trust (NASDAQ:SVC), Odonate Therapeutics, Inc. (NASDAQ:ODT), and Immunovant, Inc. (NASDAQ:IMVT). This group of stocks’ market values are similar to SKY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RGR | 14 | 102980 | 2 |
| SVC | 23 | 30778 | 6 |
| ODT | 13 | 471188 | -2 |
| IMVT | 28 | 146496 | 6 |
| Average | 19.5 | 187861 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $143 million in SKY’s case. Immunovant, Inc. (NASDAQ:IMVT) is the most popular stock in this table. On the other hand Odonate Therapeutics, Inc. (NASDAQ:ODT) is the least popular one with only 13 bullish hedge fund positions. Skyline Champion Corporation (NYSE:SKY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on SKY as the stock returned 57.6% in Q2 (through June 10th) 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.
