Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 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 Spire Inc. (NYSE:SR) in this article.
Is Spire Inc. (NYSE:SR) undervalued? Prominent investors are selling. The number of long hedge fund bets decreased by 3 recently. Our calculations also showed that SR isn’t among the 30 most popular stocks among hedge funds (view the video below). SR was in 12 hedge funds’ portfolios at the end of June. There were 15 hedge funds in our database with SR holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action regarding Spire Inc. (NYSE:SR).
How have hedgies been trading Spire Inc. (NYSE:SR)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in SR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Spire Inc. (NYSE:SR), which was worth $75.1 million at the end of the second quarter. On the second spot was GLG Partners which amassed $9.3 million worth of shares. Moreover, Citadel Investment Group, AQR Capital Management, and Balyasny Asset Management were also bullish on Spire Inc. (NYSE:SR), allocating a large percentage of their portfolios to this stock.
Due to the fact that Spire Inc. (NYSE:SR) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds who sold off their positions entirely by the end of the second quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $10.4 million in stock, and Peter J. Hark’s Shelter Harbor Advisors was right behind this move, as the fund said goodbye to about $4.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Spire Inc. (NYSE:SR). We will take a look at Stericycle Inc (NASDAQ:SRCL), Webster Financial Corporation (NYSE:WBS), Nomad Foods Limited Ordinary Shares (NYSE:NOMD), and Cameco Corporation (NYSE:CCJ). This group of stocks’ market caps match SR’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 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $470 million. That figure was $96 million in SR’s case. Nomad Foods Limited Ordinary Shares (NYSE:NOMD) is the most popular stock in this table. On the other hand Stericycle Inc (NASDAQ:SRCL) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Spire Inc. (NYSE:SR) is even less popular than SRCL. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on SR, though not to the same extent, as the stock returned 4.7% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.