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 have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider SEI Investments Company (NASDAQ:SEIC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is SEI Investments Company (NASDAQ:SEIC) a splendid investment now? Investors who are in the know were turning less bullish. The number of long hedge fund positions dropped by 3 recently. SEI Investments Company (NASDAQ:SEIC) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 37. Our calculations also showed that SEIC 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. 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 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Lee Ainslie of Maverick Capital
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 we’re going to take a gander at the fresh hedge fund action regarding SEI Investments Company (NASDAQ:SEIC).
Do Hedge Funds Think SEIC Is A Good Stock To Buy Now?
At the end of June, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the first quarter of 2020. By comparison, 37 hedge funds held shares or bullish call options in SEIC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in SEI Investments Company (NASDAQ:SEIC), which was worth $81 million at the end of the second quarter. On the second spot was Sunriver Management which amassed $28.5 million worth of shares. Markel Gayner Asset Management, Arrowstreet Capital, and Millennium Management 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 Sunriver Management allocated the biggest weight to SEI Investments Company (NASDAQ:SEIC), around 4.86% of its 13F portfolio. Goodnow Investment Group is also relatively very bullish on the stock, setting aside 1.68 percent of its 13F equity portfolio to SEIC.
Judging by the fact that SEI Investments Company (NASDAQ:SEIC) has experienced falling interest from the smart money, it’s easy to see that there exists a select few funds who were dropping their full holdings heading into Q3. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of all the hedgies tracked by Insider Monkey, valued at close to $1.5 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dumped its stock, about $1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q3.
Let’s check out hedge fund activity in other stocks similar to SEI Investments Company (NASDAQ:SEIC). These stocks are Western Midstream Partners, LP (NYSE:WES), Nielsen Holdings plc (NYSE:NLSN), Builders FirstSource, Inc. (NYSE:BLDR), ICL Group Ltd. (NYSE:ICL), Ciena Corporation (NYSE:CIEN), Berry Global Group Inc (NYSE:BERY), and Pearson PLC (NYSE:PSO). This group of stocks’ market values match SEIC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WES | 9 | 162783 | 1 |
| NLSN | 28 | 1991569 | -6 |
| BLDR | 60 | 1946230 | 12 |
| ICL | 6 | 73199 | 2 |
| CIEN | 29 | 356029 | 2 |
| BERY | 37 | 1370409 | -5 |
| PSO | 7 | 13925 | 1 |
| Average | 25.1 | 844878 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $845 million. That figure was $295 million in SEIC’s case. Builders FirstSource, Inc. (NYSE:BLDR) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 6 bullish hedge fund positions. SEI Investments Company (NASDAQ:SEIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SEIC is 38.1. 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. 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. A small number of hedge funds were also right about betting on SEIC as the stock returned 3.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
