A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Sleep Number Corporation (NASDAQ:SNBR).
Is Sleep Number Corporation (NASDAQ:SNBR) worth your attention right now? Money managers are reducing their bets on the stock. The number of bullish hedge fund bets went down by 4 lately. Our calculations also showed that SNBR isn’t among the 30 most popular stocks among hedge funds (see the video below). SNBR was in 16 hedge funds’ portfolios at the end of June. There were 20 hedge funds in our database with SNBR holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action surrounding Sleep Number Corporation (NASDAQ:SNBR).
Hedge fund activity in Sleep Number Corporation (NASDAQ:SNBR)
At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in SNBR over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Sleep Number Corporation (NASDAQ:SNBR), which was worth $36.2 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $26.9 million worth of shares. Moreover, Citadel Investment Group, GLG Partners, and AQR Capital Management were also bullish on Sleep Number Corporation (NASDAQ:SNBR), allocating a large percentage of their portfolios to this stock.
Since Sleep Number Corporation (NASDAQ:SNBR) has witnessed falling interest from the smart money, logic holds that there is a sect of fund managers who sold off their full holdings in the second quarter. At the top of the heap, Renaissance Technologies sold off the largest investment of the 750 funds watched by Insider Monkey, totaling close to $25.9 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund said goodbye to about $1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds in the second quarter.
Let’s now review hedge fund activity in other stocks similar to Sleep Number Corporation (NASDAQ:SNBR). We will take a look at K12 Inc. (NYSE:LRN), AtriCure Inc. (NASDAQ:ATRC), Tortoise Energy Infrastructure Corporation (NYSE:TYG), and Summit Hotel Properties Inc (NYSE:INN). This group of stocks’ market caps are similar to SNBR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LRN | 22 | 161549 | -2 |
| ATRC | 20 | 115819 | -5 |
| TYG | 1 | 1073 | -1 |
| INN | 12 | 12907 | 2 |
| Average | 13.75 | 72837 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $115 million in SNBR’s case. K12 Inc. (NYSE:LRN) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 1 bullish hedge fund positions. Sleep Number Corporation (NASDAQ:SNBR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on SNBR, though not to the same extent, as the stock returned 2.3% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey
