Was The Smart Money Right About Spectrum Brands Holdings, Inc. (SPB)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Spectrum Brands Holdings, Inc. (NYSE:SPB) and determine whether the smart money was really smart about this stock.

Spectrum Brands Holdings, Inc. (NYSE:SPB) investors should pay attention to a decrease in hedge fund sentiment in recent months. Spectrum Brands Holdings, Inc. (NYSE:SPB) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that SPB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s review the fresh hedge fund action surrounding Spectrum Brands Holdings, Inc. (NYSE:SPB).

Do Hedge Funds Think SPB Is A Good Stock To Buy Now?

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SPB over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

The largest stake in Spectrum Brands Holdings, Inc. (NYSE:SPB) was held by Scopus Asset Management, which reported holding $143.5 million worth of stock at the end of September. It was followed by Cardinal Capital with a $106.6 million position. Other investors bullish on the company included Pzena Investment Management, Royce & Associates, and Millennium Management. In terms of the portfolio weights assigned to each position Moerus Capital Management allocated the biggest weight to Spectrum Brands Holdings, Inc. (NYSE:SPB), around 16.39% of its 13F portfolio. Blue Grotto Capital is also relatively very bullish on the stock, dishing out 9.72 percent of its 13F equity portfolio to SPB.

Judging by the fact that Spectrum Brands Holdings, Inc. (NYSE:SPB) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that slashed their positions entirely heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest position of all the hedgies monitored by Insider Monkey, worth about $41.7 million in stock. Ira Unschuld’s fund, Brant Point Investment Management, also said goodbye to its stock, about $5 million worth. These transactions are interesting, as total hedge fund interest dropped by 5 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). We will take a look at Safehold Inc. (NYSE:SAFE), Vonage Holdings Corp. (NASDAQ:VG), BRF SA (NYSE:BRFS), Nevro Corp (NYSE:NVRO), Inari Medical, Inc. (NASDAQ:NARI), Apollo Medical Holdings, Inc. (NASDAQ:AMEH), and Cohen & Steers, Inc. (NYSE:CNS). All of these stocks’ market caps resemble SPB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $642 million in SPB’s case. Vonage Holdings Corp. (NASDAQ:VG) is the most popular stock in this table. On the other hand BRF SA (NYSE:BRFS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Spectrum Brands Holdings, Inc. (NYSE:SPB) is more popular among hedge funds. Our overall hedge fund sentiment score for SPB is 70. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, SPB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SPB were disappointed as the stock returned -6.2% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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