The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Sparton Corporation (NYSE:SPA) based on those filings.
Is Sparton Corporation (NYSE:SPA) a first-rate investment today? Prominent investors are turning less bullish. The number of bullish hedge fund positions fell by 1 lately. Sparton Corporation (NYSE:SPA) was in 6 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with Sparton Corporation (NYSE:SPA) 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 Johnson Outdoors Inc. (NASDAQ:JOUT), Western Asset Managed High Incm Fnd Inc. (NYSE:MHY), and Castle Brands Inc (NYSEMKT:ROX) to gather more data points.
According to most shareholders, hedge funds are assumed to be slow, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the masters of this group, around 700 funds. These money managers shepherd the lion’s share of the hedge fund industry’s total asset base, and by observing their inimitable picks, Insider Monkey has revealed many investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to take a glance at the key action surrounding Sparton Corporation (NYSE:SPA).
What does the smart money think about Sparton Corporation (NYSE:SPA)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 14% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ed Beddow and William Tichy’s Beddow Capital Management has the number one position in Sparton Corporation (NYSE:SPA), worth close to $12.4 million, amounting to 5.2% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $6.1 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Mario Gabelli’s GAMCO Investors, D E Shaw, and Matthew Hulsizer’s PEAK6 Capital Management.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AQR Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically, a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because none of the 700+ hedge funds tracked by Insider Monkey identified SPA as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks similar to Sparton Corporation (NYSE:SPA). We will take a look at Johnson Outdoors Inc. (NASDAQ:JOUT), Western Asset Managed High Incm Fnd Inc. (NYSE:MHY), Castle Brands Inc (NYSEMKT:ROX), and ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH). This group of stocks’ market valuations matches Sparton Corporation (NYSE:SPA)’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $20 million in Sparton Corporation (NYSE:SPA)’s case. Western Asset Managed High Incm Fnd Inc. (NYSE:MHY) is the most popular stock in this table. On the other hand, Johnson Outdoors Inc. (NASDAQ:JOUT) is the least popular one with only 4 bullish hedge fund positions. Sparton Corporation (NYSE:SPA) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Western Asset Managed High Incm Fnd Inc. (NYSE:MHY) might be a better candidate to consider a long position.