Should You Mimic the Smart Money’s Buying Spree of Sensient Technologies Corporation (SXT)?

With general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Sandler Capital Management assembled the biggest position in Sensient Technologies Corporation (NYSE:SXT). Sandler Capital Management had $22.8 million invested in the company at the end of the quarter. Select Equity Group also made a $20.6 million investment in the stock during the quarter. The following funds were also among the new SXT investors: Israel Englander’s Millennium Management, James Dondero’s Highland Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sensient Technologies Corporation (NYSE:SXT) but similarly valued. These stocks are Olin Corporation (NYSE:OLN), Cameco Corporation (USA) (NYSE:CCJ), Cavium Inc (NASDAQ:CAVM), and Pitney Bowes Inc. (NYSE:PBI). This group of stocks’ market valuations match SXT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OLN 18 989434 -10
CCJ 17 199724 -2
CAVM 24 346930 4
PBI 21 362364 2

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $176 million in SXT’s case. Cavium Inc (NASDAQ:CAVM) is the most popular stock in this table. On the other hand Cameco Corporation (USA) (NYSE:CCJ) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Sensient Technologies Corporation (NYSE:SXT) is even less popular than CCJ. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news, especially given the recent surge in the stock’s ownership. However, we would hold off for one more quarter to see whether hedge funds are holding onto their shares or even adding to their positions, or if they just decided to trade in and out of the stock.

Disclosure: None