Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
ScanSource, Inc. (NASDAQ:SCSC) was in 12 hedge funds’ portfolios at the end of December. SCSC has seen an increase in activity from the world’s largest hedge funds recently. There were 8 hedge funds in our database with SCSC holdings at the end of the previous quarter. Our calculations also showed that scsc isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are more than 8000 funds with their doors open at the moment, We choose to focus on the bigwigs of this group, around 750 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total capital, and by keeping track of their finest investments, Insider Monkey has unearthed several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Cliff Asness of AQR Capital Management
We’re going to go over the recent hedge fund action regarding ScanSource, Inc. (NASDAQ:SCSC).
How are hedge funds trading ScanSource, Inc. (NASDAQ:SCSC)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SCSC over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of ScanSource, Inc. (NASDAQ:SCSC), with a stake worth $41.6 million reported as of the end of December. Trailing Pzena Investment Management was AQR Capital Management, which amassed a stake valued at $2.7 million. Two Sigma Advisors, Renaissance Technologies, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers have jumped into ScanSource, Inc. (NASDAQ:SCSC) headfirst. Bailard Inc, managed by Thomas Bailard, created the largest position in ScanSource, Inc. (NASDAQ:SCSC). Bailard Inc had $0.5 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0.4 million position during the quarter. The other funds with brand new SCSC positions are Noam Gottesman’s GLG Partners and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ScanSource, Inc. (NASDAQ:SCSC) but similarly valued. We will take a look at ArcBest Corp (NASDAQ:ARCB), Teekay LNG Partners L.P. (NYSE:TGP), Cheetah Mobile Inc (NYSE:CMCM), and Apollo Investment Corp. (NASDAQ:AINV). All of these stocks’ market caps match SCSC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARCB | 10 | 38491 | -4 |
| TGP | 8 | 19784 | 3 |
| CMCM | 4 | 5249 | -3 |
| AINV | 15 | 29542 | 7 |
| Average | 9.25 | 23267 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $50 million in SCSC’s case. Apollo Investment Corp. (NASDAQ:AINV) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (NYSE:CMCM) is the least popular one with only 4 bullish hedge fund positions. ScanSource, Inc. (NASDAQ:SCSC) 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SCSC wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SCSC were disappointed as the stock returned 9.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
