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Shaw Communications Inc (SJR): Are Hedge Funds Right About This Stock?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Shaw Communications Inc (NYSE:SJR) a buy, sell, or hold? Money managers are turning bullish. The number of bullish hedge fund positions improved by 3 recently. Our calculations also showed that SJR isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

We’re going to take a look at the fresh hedge fund action regarding Shaw Communications Inc (NYSE:SJR).

What have hedge funds been doing with Shaw Communications Inc (NYSE:SJR)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in SJR heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds SJR Positions

More specifically, Citadel Investment Group was the largest shareholder of Shaw Communications Inc (NYSE:SJR), with a stake worth $104.8 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $43.6 million. AQR Capital Management, Two Sigma Advisors, and Bridgewater Associates were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, some big names were breaking ground themselves. Signition LP, managed by George Zweig, Shane Haas and Ravi Chander, established the most outsized position in Shaw Communications Inc (NYSE:SJR). Signition LP had $0.4 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new SJR position is David Andre and Astro Teller’s Cerebellum Capital.

Let’s now review hedge fund activity in other stocks similar to Shaw Communications Inc (NYSE:SJR). We will take a look at Coty Inc (NYSE:COTY), Invesco Ltd. (NYSE:IVZ), China Lodging Group, Limited (NASDAQ:HTHT), and Amdocs Limited (NASDAQ:DOX). This group of stocks’ market caps resemble SJR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
COTY 24 286361 10
IVZ 27 283714 8
HTHT 14 41162 -1
DOX 21 643420 0
Average 21.5 313664 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $200 million in SJR’s case. Invesco Ltd. (NYSE:IVZ) is the most popular stock in this table. On the other hand China Lodging Group, Limited (NASDAQ:HTHT) is the least popular one with only 14 bullish hedge fund positions. Shaw Communications Inc (NYSE:SJR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IVZ might be a better candidate to consider a long position.

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

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