The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Servicemaster Global Holdings Inc (NYSE:SERV) and find out how it is affected by hedge funds’ moves.
Servicemaster Global Holdings Inc (NYSE:SERV) shareholders have witnessed an increase in enthusiasm from smart money lately. 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 Copart, Inc. (NASDAQ:CPRT), Assurant, Inc. (NYSE:AIZ), and JetBlue Airways Corporation (NASDAQ:JBLU) to gather more data points.
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With all of this in mind, we’re going to review the latest action regarding Servicemaster Global Holdings Inc (NYSE:SERV).
How are hedge funds trading Servicemaster Global Holdings Inc (NYSE:SERV)?
At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 13% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jonathan Auerbach’s Hound Partners has the number one position in Servicemaster Global Holdings Inc (NYSE:SERV), worth close to $271.9 million, amounting to 7.3% of its total 13F portfolio. On Hound Partners’s heels is William von Mueffling of Cantillon Capital Management, with a $220.7 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Matt Sirovich and Jeremy Mindich’s Scopia Capital, Scott McLellan’s Marble Arch Investments and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
As aggregate interest increased, key hedge funds have been driving this bullishness. Owl Creek Asset Management, managed by Jeffrey Altman, established the most valuable position in Servicemaster Global Holdings Inc (NYSE:SERV). The funds had $58.1 million invested in the company at the end of the quarter. Jeff Lignelli’s Incline Global Management also made a $38.7 million investment in the stock during the quarter. The other funds with brand new SERV positions are Isaac Corre’s Governors Lane, Malcolm Fairbairn’s Ascend Capital, and Steve Pei’s Gratia Capital.
Let’s now review hedge fund activity in other stocks similar to Servicemaster Global Holdings Inc (NYSE:SERV). We will take a look at Copart, Inc. (NASDAQ:CPRT), Assurant, Inc. (NYSE:AIZ), JetBlue Airways Corporation (NASDAQ:JBLU), and Post Holdings Inc (NYSE:POST). This group of stocks’ market valuations resemble SERV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CPRT | 34 | 349162 | 8 |
| AIZ | 16 | 219776 | -8 |
| JBLU | 32 | 486895 | -6 |
| POST | 44 | 1553643 | 4 |
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $652 million. That figure was $1.31 billion in SERV’s case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand Assurant, Inc. (NYSE:AIZ) is the least popular one with only 16 bullish hedge fund positions. Servicemaster Global Holdings Inc (NYSE:SERV) 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 POST might be a better candidate to consider a long position.
Disclosure: none.
