Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Hedge fund interest in Santander Consumer USA Holdings Inc (NYSE:SC) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Varian Medical Systems, Inc. (NYSE:VAR), Fortinet Inc (NASDAQ:FTNT), and Restaurant Brands International Inc (NYSE:QSR) to gather more data points.
Follow Santander Consumer Usa Holdings Inc. (NYSE:SC)
Follow Santander Consumer Usa Holdings Inc. (NYSE:SC)
With all of this in mind, we’re going to analyze the latest action encompassing Santander Consumer USA Holdings Inc (NYSE:SC).
How are hedge funds trading Santander Consumer USA Holdings Inc (NYSE:SC)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Maverick Capital, managed by Lee Ainslie, holds the biggest position in Santander Consumer USA Holdings Inc (NYSE:SC). Maverick Capital has an $235.4 million position in the stock, comprising 4% of its 13F portfolio. The second most bullish fund manager is Samlyn Capital, led by Robert Pohly, holding an $112.9 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions consist of Jeffrey Tannenbaum’s Fir Tree, David Einhorn’s Greenlight Capital and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors.
Intriguingly, Anand Parekh’s Alyeska Investment Group said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, worth close to $28.6 million in stock. Julian Robertson’s fund, Tiger Management, also said goodbye to its stock, about $15 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Santander Consumer USA Holdings Inc (NYSE:SC). These stocks are Varian Medical Systems, Inc. (NYSE:VAR), Fortinet Inc (NASDAQ:FTNT), Restaurant Brands International Inc (NYSE:QSR), and Sunoco Logistics Partners L.P. (NYSE:SXL). This group of stocks’ market values resemble SC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VAR | 27 | 472014 | 5 |
| FTNT | 36 | 370618 | 10 |
| QSR | 29 | 2448593 | -8 |
| SXL | 9 | 67145 | -1 |
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was $1,045 million in SC’s case. Fortinet Inc (NASDAQ:FTNT) is the most popular stock in this table. On the other hand Sunoco Logistics Partners L.P. (NYSE:SXL) is the least popular one with only 9 bullish hedge fund positions. Santander Consumer USA Holdings Inc (NYSE:SC) 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 FTNT might be a better candidate to consider a long position.
