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Seaspan Corporation (SSW): Hedge Funds Cashed Out Too Early

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Seaspan Corporation (NYSE:SSW).

Is Seaspan Corporation (NYSE:SSW) a great investment today? Money managers are taking a pessimistic view. The number of long hedge fund bets fell by 2 in recent months. Our calculations also showed that SSW isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most investors, hedge funds are assumed to be unimportant, old investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this club, about 750 funds. These money managers have their hands on most of the smart money’s total capital, and by monitoring their matchless investments, Insider Monkey has found many investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

SSW_oct2019

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. Let’s take a peek at the fresh hedge fund action encompassing Seaspan Corporation (NYSE:SSW).

How are hedge funds trading Seaspan Corporation (NYSE:SSW)?

At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the first quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in SSW a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Bill Miller

More specifically, Fairfax Financial Holdings was the largest shareholder of Seaspan Corporation (NYSE:SSW), with a stake worth $756.1 million reported as of the end of March. Trailing Fairfax Financial Holdings was Renaissance Technologies, which amassed a stake valued at $15 million. Miller Value Partners, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that Seaspan Corporation (NYSE:SSW) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds who were dropping their entire stakes by the end of the second quarter. It’s worth mentioning that Louis Navellier’s Navellier & Associates sold off the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $1.4 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Seaspan Corporation (NYSE:SSW) but similarly valued. We will take a look at Matador Resources Co (NYSE:MTDR), ESCO Technologies Inc. (NYSE:ESE), NeoGenomics, Inc. (NASDAQ:NEO), and Harsco Corporation (NYSE:HSC). This group of stocks’ market values resemble SSW’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTDR 12 240162 -2
ESE 4 2864 -3
NEO 17 92899 2
HSC 18 137306 -1
Average 12.75 118308 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $780 million in SSW’s case. Harsco Corporation (NYSE:HSC) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 4 bullish hedge fund positions. Seaspan Corporation (NYSE:SSW) is not the least popular stock in this group but hedge fund interest is still below average. 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 SSW as the stock returned 9.7% during the same time frame and outperformed the market by an even larger margin.

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

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