The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Sterling Construction Company, Inc. (NASDAQ:STRL).
Sterling Construction Company, Inc. (NASDAQ:STRL) has experienced an increase in support from the world’s most successful money managers of late. STRL was in 9 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with STRL holdings at the end of the previous quarter. At the end of this article we will also compare STRL to other stocks including Lifetime Brands Inc (NASDAQ:LCUT), Asterias Biotherapeutics Inc (NYSEMKT:AST), and Autobytel Inc. (NASDAQ:ABTL) to get a better sense of its popularity.
Follow Sterling Infrastructure Inc. (NASDAQ:STRL)
Follow Sterling Infrastructure Inc. (NASDAQ:STRL)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What does the smart money think about Sterling Construction Company, Inc. (NASDAQ:STRL)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in STRL over the last 5 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in Sterling Construction Company, Inc. (NASDAQ:STRL). Renaissance Technologies has a $5.1 million position in the stock. On Renaissance Technologies’ heels is Royce & Associates, led by Chuck Royce, which holds a $1.5 million position. Some other members of the smart money that hold long positions comprise Edgar Wachenheim’s Greenhaven Associates and Dmitry Balyasny’s Balyasny Asset Management. We should note that Nantahala Capital Management is 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.
Consequently, key money managers were leading the bulls’ herd. Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, created the most outsized position in Sterling Construction Company, Inc. (NASDAQ:STRL). Nantahala Capital Management had $1 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $0.5 million investment in the stock during the quarter. The only other fund with a brand new STRL position is Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to Sterling Construction Company, Inc. (NASDAQ:STRL). These stocks are Lifetime Brands Inc (NASDAQ:LCUT), Asterias Biotherapeutics Inc (NYSEMKT:AST), Autobytel Inc. (NASDAQ:ABTL), and Global Partner Acquisition Corp. (NASDAQ:GPAC). This group of stocks’ market caps are closest to STRL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LCUT | 3 | 3696 | -1 |
| AST | 4 | 16133 | 4 |
| ABTL | 13 | 37674 | 0 |
| GPAC | 11 | 59015 | 0 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $10 million in STRL’s case. Autobytel Inc. (NASDAQ:ABTL) is the most popular stock in this table. On the other hand Lifetime Brands Inc (NASDAQ:LCUT) is the least popular one with only 3 bullish hedge fund positions. Sterling Construction Company, Inc. (NASDAQ:STRL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ABTL might be a better candidate to consider taking a long position in.
Disclosure: None
