Hedge Funds Aren’t Crazy About Spectrum Brands Holdings, Inc. (SPB) Anymore

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Spectrum Brands Holdings, Inc. (NYSE:SPB) was in 25 hedge funds’ portfolios at the end of September. Spectrum Brands Holdings, Inc. (NYSE:SPB) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. There were 29 hedge funds in our database with Spectrum Brands Holdings, Inc. (NYSE:SPB) positions at the end of the previous quarter. At the end of this article, we will also compare Spectrum Brands Holdings, Inc. (NYSE:SPB) to other stocks, including Range Resources Corp. (NYSE:RRC), Service Corporation International (NYSE:SCI), and Westar Energy Inc (NYSE:WR) to get a better sense of its popularity.

In the 21st century investor’s toolkit, there are several tools market participants put to use to value their stock investments. Two of the best tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform their index-focused peers by a solid amount (see the details here).

Now, we’re going to take a glance at the new action surrounding Spectrum Brands Holdings, Inc. (NYSE:SPB).

Hedge fund activity in Spectrum Brands Holdings, Inc. (NYSE:SPB)

At the end of Q3, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 14% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Brahman Capital, managed by Peter Adam Hochfelder, holds the largest position in Spectrum Brands Holdings, Inc. (NYSE:SPB). Brahman Capital has a $239.7 million position in the stock, comprising 4.7% of its 13F portfolio. Coming in second is Tourbillon Capital Partners, led by Jason Karp, holding a $109.1 million position; 2.9% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Stephen C. Freidheim’s Cyrus Capital Partners, Renaissance Technologies, and Israel Englander’s Millennium Management.

Seeing as Spectrum Brands Holdings, Inc. (NYSE:SPB) has faced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few money managers who were dropping their positions entirely by the end of the third quarter. It’s worth mentioning that Christian Leone’s Luxor Capital Group dumped the biggest position of the 700 funds followed by Insider Monkey, valued at close to $49.7 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dropped about $23.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). These stocks are Range Resources Corp. (NYSE:RRC), Service Corporation International (NYSE:SCI), Westar Energy Inc (NYSE:WR), and Carlyle Group LP (NASDAQ:CG). This group of stocks’ market valuations matches Spectrum Brands Holdings, Inc. (NYSE:SPB)’s market valuation.

As you can see, these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $547 million in Spectrum Brands Holdings, Inc. (NYSE:SPB)’s case. Service Corporation International (NYSE:SCI) is the most popular stock in this table. On the other hand, Westar Energy Inc (NYSE:WR) is the least popular one with only 10 bullish hedge fund positions. Spectrum Brands Holdings, Inc. (NYSE:SPB) 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, Service Corporation International (NYSE:SCI) might be a better candidate to consider a long position.