Is SRI A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Stoneridge, Inc. (NYSE:SRI)?

Is SRI a good stock to buy now? Money managers were buying. The number of bullish hedge fund positions advanced by 1 in recent months. Stoneridge, Inc. (NYSE:SRI) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 24. Our calculations also showed that SRI 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 9 hedge funds in our database with SRI positions at the end of the second quarter.

Video: 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 a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

Now we’re going to take a look at the key hedge fund action regarding Stoneridge, Inc. (NYSE:SRI).

Do Hedge Funds Think SRI Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SRI over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SRI A Good Stock To Buy?

More specifically, Royce & Associates was the largest shareholder of Stoneridge, Inc. (NYSE:SRI), with a stake worth $12.1 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $8.5 million. Kingdon Capital, Private Capital Management, and GAMCO Investors 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 Private Capital Management allocated the biggest weight to Stoneridge, Inc. (NYSE:SRI), around 1.68% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, designating 0.83 percent of its 13F equity portfolio to SRI.

As aggregate interest increased, specific money managers were breaking ground themselves. Hudson Bay Capital Management, managed by Sander Gerber, created the biggest position in Stoneridge, Inc. (NYSE:SRI). Hudson Bay Capital Management had $1.7 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.7 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Stoneridge, Inc. (NYSE:SRI) but similarly valued. These stocks are Transocean Ltd (NYSE:RIG), Bryn Mawr Bank Corp. (NASDAQ:BMTC), Ichor Holdings Ltd. (NASDAQ:ICHR), MeiraGTx Holdings plc (NASDAQ:MGTX), ProSight Global, Inc. (NYSE:PROS), Enova International Inc (NYSE:ENVA), and Clean Energy Fuels Corp (NASDAQ:CLNE). All of these stocks’ market caps are similar to SRI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RIG 17 24838 -4
BMTC 13 31872 1
ICHR 13 32135 -3
MGTX 14 174914 -4
PROS 11 10199 7
ENVA 23 118896 2
CLNE 11 16640 0
Average 14.6 58499 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $44 million in SRI’s case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand ProSight Global, Inc. (NYSE:PROS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Stoneridge, Inc. (NYSE:SRI) is even less popular than PROS. Our overall hedge fund sentiment score for SRI is 18.5. 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 clearly dropped the ball on SRI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on SRI as the stock returned 66.7% since Q3 (through December 8th) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.