Hedge Funds Are Cashing Out Of Simpson Manufacturing Co, Inc. (SSD)

In this article we are going to use hedge fund sentiment as a tool and determine whether Simpson Manufacturing Co, Inc. (NYSE:SSD) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Simpson Manufacturing Co, Inc. (NYSE:SSD) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. SSD shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. There were 25 hedge funds in our database with SSD holdings at the end of March. Our calculations also showed that SSD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Bruce Kovner of Caxton Associates LP

Keeping this in mind we’re going to go over the key hedge fund action surrounding Simpson Manufacturing Co, Inc. (NYSE:SSD).

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

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SSD over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Simpson Manufacturing Co, Inc. (NYSE:SSD) was held by Ariel Investments, which reported holding $76.9 million worth of stock at the end of June. It was followed by Royce & Associates with a $37.8 million position. Other investors bullish on the company included AQR Capital Management, Fisher Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to Simpson Manufacturing Co, Inc. (NYSE:SSD), around 0.72% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.4 percent of its 13F equity portfolio to SSD.

Due to the fact that Simpson Manufacturing Co, Inc. (NYSE:SSD) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of funds that elected to cut their full holdings by the end of the second quarter. Interestingly, Jack Ripsteen’s Potrero Capital Research dropped the biggest stake of all the hedgies watched by Insider Monkey, totaling an estimated $8.4 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $3.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 6 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Simpson Manufacturing Co, Inc. (NYSE:SSD) but similarly valued. We will take a look at Sprout Social, Inc. (NASDAQ:SPT), Daqo New Energy Corp (NYSE:DQ), TriNet Group Inc (NYSE:TNET), Goosehead Insurance, Inc. (NASDAQ:GSHD), Sterling Bancorp (NYSE:STL), Kemper Corporation (NYSE:KMPR), and Novanta Inc. (NASDAQ:NOVT). All of these stocks’ market caps are closest to SSD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $199 million in SSD’s case. Sprout Social, Inc. (NASDAQ:SPT) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 13 bullish hedge fund positions. Simpson Manufacturing Co, Inc. (NYSE:SSD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SSD is 45.9. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on SSD as the stock returned 4.2% since the end of Q2 (through 10/22) 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.