We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Scorpio Bulkers Inc (NYSE:SALT).
Scorpio Bulkers Inc (NYSE:SALT) has seen a decrease in hedge fund sentiment recently. SALT was in 16 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with SALT positions at the end of the previous quarter. 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 RealD (NYSE:RLD), Northwest Biotherapeutics, Inc (NASDAQ:NWBO), and ShoreTel, Inc. (NASDAQ:SHOR) to gather more data points.
With all of this in mind, we’re going to analyze the latest action regarding Scorpio Bulkers Inc (NYSE:SALT).
How have hedgies been trading Scorpio Bulkers Inc (NYSE:SALT)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Monarch Alternative Capital, managed by Michael Weinstock, holds the largest position in Scorpio Bulkers Inc (NYSE:SALT). Monarch Alternative Capital has a $57.2 million position in the stock, comprising 20.1% of its 13F portfolio. The second largest stake is held by Kensico Capital, managed by Michael Lowenstein, which holds a $46.2 million position; 1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise Brian Taylor’s Pine River Capital Management, Kevin Michael Ulrich and Anthony Davis’s Anchorage Advisors and Marc Lasry’s Avenue Capital.
Due to the fact that Scorpio Bulkers Inc (NYSE:SALT) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers who sold off their entire stakes in the third quarter. At the top of the heap, Robert Henry Lynch’s Aristeia Capital dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $4.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 6 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Scorpio Bulkers Inc (NYSE:SALT) but similarly valued. These stocks are RealD (NYSE:RLD), Northwest Biotherapeutics, Inc (NASDAQ:NWBO), ShoreTel, Inc. (NASDAQ:SHOR), and Seacoast Banking Corporation of Florida (NASDAQ:SBCF). This group of stocks’ market values match SALT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RLD | 16 | 173768 | -2 |
| NWBO | 12 | 134127 | 3 |
| SHOR | 23 | 138558 | 2 |
| SBCF | 12 | 59267 | -1 |
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $227 million in SALT’s case. ShoreTel, Inc. (NASDAQ:SHOR) is the most popular stock in this table. On the other hand Northwest Biotherapeutics, Inc (NASDAQ:NWBO) is the least popular one with only 12 bullish hedge fund positions. Scorpio Bulkers Inc (NYSE:SALT) 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 SHOR might be a better candidate to consider a long position.
