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Is U.S. Silica Holdings Inc (SLCA) A Good Stock To Buy?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of U.S. Silica Holdings Inc (NYSE:SLCA).

U.S. Silica Holdings Inc (NYSE:SLCA) was in 16 hedge funds’ portfolios at the end of the third quarter of 2018. SLCA shareholders have witnessed a decrease in hedge fund interest recently. There were 17 hedge funds in our database with SLCA holdings at the end of the previous quarter. Our calculations also showed that SLCA isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce

Let’s go over the key hedge fund action surrounding U.S. Silica Holdings Inc (NYSE:SLCA).

How are hedge funds trading U.S. Silica Holdings Inc (NYSE:SLCA)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in SLCA at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

No of Hedge Funds SLCA Positions

The largest stake in U.S. Silica Holdings Inc (NYSE:SLCA) was held by Ariel Investments, which reported holding $158.8 million worth of stock at the end of September. It was followed by Rima Senvest Management with a $62.5 million position. Other investors bullish on the company included Blue Mountain Capital, Royce & Associates, and SailingStone Capital Partners.

Due to the fact that U.S. Silica Holdings Inc (NYSE:SLCA) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that elected to cut their entire stakes in the third quarter. At the top of the heap, Till Bechtolsheimer’s Arosa Capital Management cut the largest position of all the hedgies watched by Insider Monkey, worth about $3.3 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its stock, about $2.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to U.S. Silica Holdings Inc (NYSE:SLCA). These stocks are Bright Scholar Education Holdings Limited (NYSE:BEDU), Crocs, Inc. (NASDAQ:CROX), Neenah Paper, Inc. (NYSE:NP), and Higher One Holdings, Inc (NYSE:ONE). This group of stocks’ market values resemble SLCA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BEDU 10 120386 -3
CROX 27 255232 9
NP 7 33707 0
ONE 5 11050 -1
Average 12.25 105094 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $303 million in SLCA’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Higher One Holdings, Inc (NYSE:ONE) is the least popular one with only 5 bullish hedge fund positions. U.S. Silica Holdings Inc (NYSE:SLCA) 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 CROX might be a better candidate to consider a long position.

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

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