Hedge Funds Are Buying SIFCO Industries, Inc. (SIF)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about SIFCO Industries, Inc. (NYSE:SIF) in this article.

SIFCO Industries, Inc. (NYSE:SIF) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. SIF shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 3 hedge funds in our database with SIF positions at the end of the fourth quarter. Our calculations also showed that SIF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. Now we’re going to check out the recent hedge fund action regarding SIFCO Industries, Inc. (NYSE:SIF).

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

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in SIF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Minerva Advisors, managed by David P. Cohen, holds the biggest position in SIFCO Industries, Inc. (NYSE:SIF). Minerva Advisors has a $4.9 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $1.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to SIFCO Industries, Inc. (NYSE:SIF), around 2.67% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.0039 percent of its 13F equity portfolio to SIF.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in SIFCO Industries, Inc. (NYSE:SIF). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SIFCO Industries, Inc. (NYSE:SIF) but similarly valued. These stocks are Jupai Holdings Limited (NYSE:JP), ECMOHO Limited (NASDAQ:MOHO), Dover Motorsports, Inc. (NYSE:DVD), Network-1 Technologies Inc (NYSE:NTIP), TOP Ships Inc. (NASDAQ:TOPS), Timber Pharmaceuticals, Inc. (NYSE:TMBR), and Huadi International Group Co., Ltd. (NASDAQ:HUDI). All of these stocks’ market caps match SIF’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $7 million in SIF’s case. Dover Motorsports, Inc. (NYSE:DVD) is the most popular stock in this table. On the other hand TOP Ships Inc. (NASDAQ:TOPS) is the least popular one with only 1 bullish hedge fund positions. SIFCO Industries, Inc. (NYSE:SIF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIF is 80. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately SIF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SIF were disappointed as the stock returned -23.9% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.

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