World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Scotts Miracle-Gro Co (NYSE:SMG) a bargain? Money managers are taking an optimistic view. The number of long hedge fund bets rose by 5 lately. Scotts Miracle-Gro Co (NYSE:SMG) was in 27 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with Scotts Miracle-Gro Co (NYSE:SMG) positions at the end of the previous quarter. At the end of this article, we will also compare Scotts Miracle-Gro Co (NYSE:SMG) to other stocks, including Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Validus Holdings, Ltd. (NYSE:VR), and Guidewire Software Inc (NYSE:GWRE) to get a better sense of its popularity.
Follow Scotts Miracle-Gro Co (NYSE:SMG)
Follow Scotts Miracle-Gro Co (NYSE:SMG)
In the financial world, there are several signals stock traders put to use to value publicly traded companies. Some of the most useful signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a significant margin (see the details here).
With all of this in mind, let’s take a glance at the fresh action surrounding Scotts Miracle-Gro Co (NYSE:SMG).
What have hedge funds been doing with Scotts Miracle-Gro Co (NYSE:SMG)?
At the end of Q3, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 23% from the second quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund and institutional investor database, Ken Fisher’s Fisher Asset Management has the largest position in Scotts Miracle-Gro Co (NYSE:SMG), worth close to $89.6 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Steve Cohen of Point72 Asset Management, with a $29.3 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Israel Englander’s Millennium Management, Dmitry Balyasny’s Balyasny Asset Management, and Renaissance Technologies.
Consequently, some big names were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, initiated the biggest position in Scotts Miracle-Gro Co (NYSE:SMG). Highbridge Capital Management had $7.9 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $4.4 million position during the quarter. The other funds with brand new Scotts Miracle-Gro Co (NYSE:SMG) positions are Neil Chriss’ Hutchin Hill Capital, Ira Unschuld’s Brant Point Investment Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Scotts Miracle-Gro Co (NYSE:SMG) but similarly valued. These stocks are Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Validus Holdings, Ltd. (NYSE:VR), Guidewire Software Inc (NYSE:GWRE), and Colfax Corp (NYSE:CFX). This group of stocks’ market caps matches Scotts Miracle-Gro Co (NYSE:SMG)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RARE | 25 | 330935 | 1 |
| VR | 19 | 220662 | 2 |
| GWRE | 14 | 107578 | 1 |
| CFX | 27 | 758501 | 3 |
As you can see, these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $589 million in Scotts Miracle-Gro Co (NYSE:SMG)’s case. Colfax Corp (NYSE:CFX) is the most popular stock in this table. On the other hand, Guidewire Software Inc (NYSE:GWRE) is the least popular one with only 14 bullish hedge fund positions. Scotts Miracle-Gro Co (NYSE:SMG) 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, Colfax Corp (NYSE:CFX) might be a better candidate to consider a long position.
