Hedge Funds Are Selling Steel Partners Holdings LP (SPLP)

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. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value 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 investors think of Steel Partners Holdings LP (NYSE:SPLP).

Steel Partners Holdings LP (NYSE:SPLP) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. SPLP has experienced a decrease in enthusiasm from smart money lately. There were 4 hedge funds in our database with SPLP holdings at the end of December. Our calculations also showed that SPLP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Warren Lichtenstein of Steel Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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 let’s check out the latest hedge fund action regarding Steel Partners Holdings LP (NYSE:SPLP).

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

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in SPLP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Steel Partners, managed by Warren Lichtenstein, holds the biggest position in Steel Partners Holdings LP (NYSE:SPLP). Steel Partners has a $58.5 million position in the stock, comprising 20.9% of its 13F portfolio. The second largest stake is held by GAMCO Investors, led by Mario Gabelli, holding a $1.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Steel Partners allocated the biggest weight to Steel Partners Holdings LP (NYSE:SPLP), around 20.89% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to SPLP.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Invenomic Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified SPLP as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks similar to Steel Partners Holdings LP (NYSE:SPLP). These stocks are Radiant Logistics, Inc. (NYSE:RLGT), Covenant Logistics Group, Inc. (NASDAQ:CVLG), FTS International, Inc. (NYSE:FTSI), First Internet Bancorp (NASDAQ:INBK), Seneca Foods Corp (NASDAQ:SENEA), Beam Global (NASDAQ:BEEM), and Alexco Resource Corp. (NYSE:AXU). This group of stocks’ market caps are similar to SPLP’s market cap.

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As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $60 million in SPLP’s case. Radiant Logistics, Inc. (NYSE:RLGT) is the most popular stock in this table. On the other hand Alexco Resource Corp. (NYSE:AXU) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Steel Partners Holdings LP (NYSE:SPLP) is even less popular than AXU. Our overall hedge fund sentiment score for SPLP is 14. 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. Hedge funds clearly dropped the ball on SPLP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on SPLP as the stock returned 103.5% since Q1 (through June 11th) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.