The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Sleep Number Corporation (NASDAQ:SNBR)?
Is Sleep Number Corporation (NASDAQ:SNBR) a safe investment today? Prominent investors were taking an optimistic view. The number of bullish hedge fund positions advanced by 4 recently. Sleep Number Corporation (NASDAQ:SNBR) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SNBR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with SNBR holdings at the end of March.
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 79 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.
Louis Navellier of Navellier & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind let’s analyze the latest hedge fund action encompassing Sleep Number Corporation (NASDAQ:SNBR).
Do Hedge Funds Think SNBR Is A Good Stock To Buy Now?
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SNBR over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Sleep Number Corporation (NASDAQ:SNBR). Arrowstreet Capital has a $69.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Giverny Capital, managed by Francois Rochon, which holds a $38.2 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Renaissance Technologies. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Sleep Number Corporation (NASDAQ:SNBR), around 2.32% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, dishing out 2.08 percent of its 13F equity portfolio to SNBR.
As one would reasonably expect, key money managers were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), established the biggest position in Sleep Number Corporation (NASDAQ:SNBR). Schonfeld Strategic Advisors had $7.6 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also initiated a $2 million position during the quarter. The other funds with brand new SNBR positions are Dmitry Balyasny’s Balyasny Asset Management, Louis Navellier’s Navellier & Associates, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Sleep Number Corporation (NASDAQ:SNBR) but similarly valued. We will take a look at Veracyte Inc (NASDAQ:VCYT), Rush Street Interactive, Inc. (NYSE:RSI), Sunstone Hotel Investors Inc (NYSE:SHO), Fulgent Genetics, Inc. (NASDAQ:FLGT), Pacira Biosciences Inc (NASDAQ:PCRX), JinkoSolar Holding Co., Ltd. (NYSE:JKS), and Pactiv Evergreen Inc. (NASDAQ:PTVE). All of these stocks’ market caps are similar to SNBR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VCYT | 22 | 351765 | 3 |
| RSI | 15 | 102246 | -2 |
| SHO | 18 | 73632 | 1 |
| FLGT | 13 | 69063 | -5 |
| PCRX | 23 | 433466 | 3 |
| JKS | 7 | 23960 | -6 |
| PTVE | 6 | 112761 | -3 |
| Average | 14.9 | 166699 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $242 million in SNBR’s case. Pacira Biosciences Inc (NASDAQ:PCRX) is the most popular stock in this table. On the other hand Pactiv Evergreen Inc. (NASDAQ:PTVE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Sleep Number Corporation (NASDAQ:SNBR) is more popular among hedge funds. Our overall hedge fund sentiment score for SNBR is 89. 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. Unfortunately SNBR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SNBR were disappointed as the stock returned -16.1% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.
Follow Sleep Number Corp (NASDAQ:SNBR)
Follow Sleep Number Corp (NASDAQ:SNBR)
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Disclosure: None. This article was originally published at Insider Monkey.
