Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of The Scotts Miracle-Gro Company (NYSE:SMG) based on that data and determine whether they were really smart about the stock.
Is The Scotts Miracle-Gro Company (NYSE:SMG) the right pick for your portfolio? The smart money was becoming less confident. The number of bullish hedge fund bets dropped by 2 in recent months. The Scotts Miracle-Gro Company (NYSE:SMG) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that SMG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to view the fresh hedge fund action encompassing The Scotts Miracle-Gro Company (NYSE:SMG).
Do Hedge Funds Think SMG Is A Good Stock To Buy Now?
At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SMG over the last 25 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of The Scotts Miracle-Gro Company (NYSE:SMG), with a stake worth $104.5 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $35.7 million. D E Shaw, GAMCO Investors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Franklin Street Capital allocated the biggest weight to The Scotts Miracle-Gro Company (NYSE:SMG), around 2.4% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, earmarking 1.01 percent of its 13F equity portfolio to SMG.
Seeing as The Scotts Miracle-Gro Company (NYSE:SMG) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Noam Gottesman’s GLG Partners dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $23.4 million in stock. McKinley Capital Management, also said goodbye to its stock, about $10.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Scotts Miracle-Gro Company (NYSE:SMG) but similarly valued. These stocks are Ralph Lauren Corporation (NYSE:RL), Pinnacle West Capital Corporation (NYSE:PNW), Arrival (NASDAQ:ARVL), Commerce Bancshares, Inc. (NASDAQ:CBSH), Apache Corporation (NYSE:APA), Penske Automotive Group, Inc. (NYSE:PAG), and Nutanix, Inc. (NASDAQ:NTNX). All of these stocks’ market caps resemble SMG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RL | 25 | 444724 | -7 |
| PNW | 21 | 175044 | 3 |
| ARVL | 4 | 10081 | -13 |
| CBSH | 16 | 106578 | 0 |
| APA | 33 | 458675 | -4 |
| PAG | 17 | 241932 | -2 |
| NTNX | 28 | 1277247 | -1 |
| Average | 20.6 | 387754 | -3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $257 million in SMG’s case. Apache Corporation (NYSE:APA) is the most popular stock in this table. On the other hand Arrival (NASDAQ:ARVL) is the least popular one with only 4 bullish hedge fund positions. The Scotts Miracle-Gro Company (NYSE:SMG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SMG is 74.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on SMG as the stock returned 3.7% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Scotts Miracle-Gro Co (NYSE:SMG)
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Disclosure: None. This article was originally published at Insider Monkey.
