The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards SMART Global Holdings, Inc. (NASDAQ:SGH).
SMART Global Holdings, Inc. (NASDAQ:SGH) investors should be aware of a decrease in hedge fund interest lately. SGH was in 10 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with SGH positions at the end of the previous quarter. Our calculations also showed that SGH isn’t among the 30 most popular stocks among hedge funds.
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’ 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action surrounding SMART Global Holdings, Inc. (NASDAQ:SGH).
How are hedge funds trading SMART Global Holdings, Inc. (NASDAQ:SGH)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SGH over the last 15 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.
Of the funds tracked by Insider Monkey, Jim Davidson,áDave RouxáandáGlenn Hutchins’s Silver Lake Partners has the largest position in SMART Global Holdings, Inc. (NASDAQ:SGH), worth close to $177.7 million, amounting to 4.1% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, led by Jim Simons, holding a $6.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass Seymour Sy Kaufman and Michael Stark’s Crosslink Capital, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.
Judging by the fact that SMART Global Holdings, Inc. (NASDAQ:SGH) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their positions entirely heading into Q3. At the top of the heap, Peter S. Park’s Park West Asset Management dropped the largest position of the 700 funds tracked by Insider Monkey, worth about $59.4 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund cut about $10.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to SMART Global Holdings, Inc. (NASDAQ:SGH). These stocks are EVI Industries, Inc. (NYSEAMEX:EVI), MarineMax, Inc. (NYSE:HZO), Ares Commercial Real Estate Corp (NYSE:ACRE), and Sentinel Energy Services Inc. (NASDAQ:STNL). This group of stocks’ market valuations match SGH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVI | 1 | 2642 | 0 |
| HZO | 11 | 26952 | -6 |
| ACRE | 10 | 24897 | 5 |
| STNL | 15 | 160888 | -1 |
| Average | 9.25 | 53845 | -0.5 |
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 $54 million. That figure was $196 million in SGH’s case. Sentinel Energy Services Inc. (NASDAQ:STNL) is the most popular stock in this table. On the other hand EVI Industries, Inc. (NYSEAMEX:EVI) is the least popular one with only 1 bullish hedge fund positions. SMART Global Holdings, Inc. (NASDAQ:SGH) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SGH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SGH were disappointed as the stock returned 1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
