We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Sprouts Farmers Market Inc (NASDAQ:SFM) based on that data.
Is Sprouts Farmers Market Inc (NASDAQ:SFM) the right pick for your portfolio? The smart money was getting less optimistic. The number of long hedge fund positions shrunk by 4 lately. Sprouts Farmers Market Inc (NASDAQ:SFM) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. Our calculations also showed that SFM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 25 hedge funds in our database with SFM holdings at the end of December.
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David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Sprouts Farmers Market Inc (NASDAQ:SFM).
Do Hedge Funds Think SFM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in SFM 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.
More specifically, Renaissance Technologies was the largest shareholder of Sprouts Farmers Market Inc (NASDAQ:SFM), with a stake worth $146.1 million reported as of the end of March. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $58.3 million. Citadel Investment Group, Half Sky Capital, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to Sprouts Farmers Market Inc (NASDAQ:SFM), around 14.85% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.34 percent of its 13F equity portfolio to SFM.
Because Sprouts Farmers Market Inc (NASDAQ:SFM) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who sold off their full holdings last quarter. It’s worth mentioning that Ian Simm’s Impax Asset Management dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $11.5 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund said goodbye to about $2.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sprouts Farmers Market Inc (NASDAQ:SFM) but similarly valued. We will take a look at SSR Mining Inc. (NASDAQ:SSRM), Rent-A-Center Inc (NASDAQ:RCII), Southwestern Energy Company (NYSE:SWN), Arcosa, Inc. (NYSE:ACA), Relay Therapeutics, Inc. (NASDAQ:RLAY), Commscope Holding Company Inc (NASDAQ:COMM), and Independent Bank Group Inc (NASDAQ:IBTX). This group of stocks’ market values resemble SFM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSRM | 16 | 178048 | -2 |
| RCII | 26 | 487953 | 4 |
| SWN | 22 | 207392 | 1 |
| ACA | 17 | 220346 | 0 |
| RLAY | 20 | 636649 | 3 |
| COMM | 32 | 757950 | -3 |
| IBTX | 9 | 74670 | -5 |
| Average | 20.3 | 366144 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $405 million in SFM’s case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 9 bullish hedge fund positions. Sprouts Farmers Market Inc (NASDAQ:SFM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SFM is 48.1. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SFM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SFM were disappointed as the stock returned -3.4% since the end of March (through 7/16) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
