We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Sanmina Corp (NASDAQ:SANM) , and what that likely means for the prospects of the company and its stock.
Sanmina Corp (NASDAQ:SANM) shareholders have witnessed a decrease in support from the world’s most successful money managers in recent months. SANM was in 20 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with SANM positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as On Assignment, Inc. (NYSE:ASGN), Novavax, Inc. (NASDAQ:NVAX), and Mine Safety Appliances (NYSE:MSA) to gather more data points.
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What does the smart money think about Sanmina Corp (NASDAQ:SANM)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 5% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards SANM over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Sanmina Corp (NASDAQ:SANM). Arrowstreet Capital has a $25.2 million position in the stock. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $20.5 million position. Other professional money managers that are bullish encompass Chuck Royce’s Royce & Associates, Robert B. Gillam’s McKinley Capital Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Sanmina Corp (NASDAQ:SANM) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that decided to sell off their full holdings heading into Q4. At the top of the heap, David Costen Haley’s HBK Investments dropped the largest position of all the hedgies watched by Insider Monkey, worth close to $1.5 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $1.2 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sanmina Corp (NASDAQ:SANM) but similarly valued. These stocks are On Assignment, Inc. (NYSE:ASGN), Novavax, Inc. (NASDAQ:NVAX), Mine Safety Appliances (NYSE:MSA), and LTC Properties Inc (NYSE:LTC). This group of stocks’ market caps resemble SANM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASGN | 18 | 140014 | 0 |
| NVAX | 13 | 21521 | -3 |
| MSA | 10 | 18371 | 1 |
| LTC | 5 | 10170 | -1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $103 million in SANM’s case. On Assignment, Inc. (NYSE:ASGN) is the most popular stock in this table. On the other hand LTC Properties Inc (NYSE:LTC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Sanmina Corp (NASDAQ:SANM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
