Is Strattec Security Corp. (STRT) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Strattec Security Corp. (NASDAQ:STRT).

Hedge fund interest in Strattec Security Corp. (NASDAQ:STRT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that STRT 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). 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 Citizens Community Bancorp Inc. (NASDAQ:CZWI), Nabriva Therapeutics plc (NASDAQ:NBRV), and Gevo, Inc. (NASDAQ:GEVO) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are assumed to be slow, old financial tools of the past. While there are over 8000 funds with their doors open at the moment, Our researchers hone in on the bigwigs of this club, approximately 850 funds. It is estimated that this group of investors preside over the lion’s share of all hedge funds’ total asset base, and by monitoring their first-class investments, Insider Monkey has figured out many investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

John Rogers Ariel Investments

John Rogers of Ariel Investments

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 10 most profitable companies in the world 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 review the fresh hedge fund action surrounding Strattec Security Corp. (NASDAQ:STRT).

What does smart money think about Strattec Security Corp. (NASDAQ:STRT)?

At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in STRT over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GAMCO Investors was the largest shareholder of Strattec Security Corp. (NASDAQ:STRT), with a stake worth $8 million reported as of the end of September. Trailing GAMCO Investors was Ariel Investments, which amassed a stake valued at $2.6 million. Renaissance Technologies was 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 GAMCO Investors allocated the biggest weight to Strattec Security Corp. (NASDAQ:STRT), around 0.09% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to STRT.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s go over hedge fund activity in other stocks similar to Strattec Security Corp. (NASDAQ:STRT). We will take a look at Citizens Community Bancorp Inc. (NASDAQ:CZWI), Nabriva Therapeutics plc (NASDAQ:NBRV), Gevo, Inc. (NASDAQ:GEVO), Innodata Inc (NASDAQ:INOD), Aravive, Inc. (NASDAQ:ARAV), Northern Technologies International Corp (NASDAQ:NTIC), and iMedia Brands, Inc. (NASDAQ:IMBI). This group of stocks’ market valuations are similar to STRT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CZWI 5 10811 0
NBRV 10 4863 2
GEVO 4 847 2
INOD 1 3587 -2
ARAV 7 4429 0
NTIC 4 4818 0
IMBI 5 3730 4
Average 5.1 4726 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $13 million in STRT’s case. Nabriva Therapeutics plc (NASDAQ:NBRV) is the most popular stock in this table. On the other hand Innodata Inc (NASDAQ:INOD) is the least popular one with only 1 bullish hedge fund positions. Strattec Security Corp. (NASDAQ:STRT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STRT is 26.1. 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. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on STRT as the stock returned 90.5% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.

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