Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Seneca Foods Corp (NASDAQ:SENEA).
Seneca Foods Corp (NASDAQ:SENEA) has seen an increase in activity from the world’s largest hedge funds in recent months. Seneca Foods Corp (NASDAQ:SENEA) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 9 hedge funds in our database with SENEA positions at the end of the second quarter. Our calculations also showed that SENEA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding Seneca Foods Corp (NASDAQ:SENEA).
Do Hedge Funds Think SENEA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SENEA over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the biggest position in Seneca Foods Corp (NASDAQ:SENEA), worth close to $15.2 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Renaissance Technologies, holding a $6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain Noam Gottesman’s GLG Partners, Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Seneca Foods Corp (NASDAQ:SENEA), around 0.16% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to SENEA.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Seneca Foods Corp (NASDAQ:SENEA) headfirst. AQR Capital Management, managed by Cliff Asness, assembled the most outsized position in Seneca Foods Corp (NASDAQ:SENEA). AQR Capital Management had $2.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.4 million position during the quarter. The following funds were also among the new SENEA investors: Peter Muller’s PDT Partners and Greg Eisner’s Engineers Gate Manager.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Seneca Foods Corp (NASDAQ:SENEA) but similarly valued. These stocks are Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), China Distance Education Hldgs Ltd (NYSE:DL), AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), Genesco Inc. (NYSE:GCO), Craft Brew Alliance Inc (NASDAQ:BREW), Precision BioSciences, Inc. (NASDAQ:DTIL), and Oportun Financial Corporation (NASDAQ:OPRT). This group of stocks’ market caps are similar to SENEA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $32 million in SENEA’s case. Precision BioSciences, Inc. (NASDAQ:DTIL) is the most popular stock in this table. On the other hand China Distance Education Hldgs Ltd (NYSE:DL) is the least popular one with only 3 bullish hedge fund positions. Seneca Foods Corp (NASDAQ:SENEA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SENEA is 73.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on SENEA as the stock returned 19.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.