While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Seaboard Corporation (NYSE:SEB).
Is SEB a good stock to buy now? Seaboard Corporation (NYSE:SEB) shareholders have witnessed an increase in hedge fund interest recently. Seaboard Corporation (NYSE:SEB) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. Our calculations also showed that SEB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our experts look at the bigwigs of this club, about 850 funds. It is estimated that this group of investors preside over most of the smart money’s total asset base, and by observing their first-class investments, Insider Monkey has uncovered various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
John Levin of Levin Capital Strategies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a glance at the key hedge fund action encompassing Seaboard Corporation (NYSE:SEB).
Do Hedge Funds Think SEB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in SEB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Kahn Brothers held the most valuable stake in Seaboard Corporation (NYSE:SEB), which was worth $31.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $23.7 million worth of shares. Diamond Hill Capital, Sabrepoint Capital, and Harspring Capital Management 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 Kahn Brothers allocated the biggest weight to Seaboard Corporation (NYSE:SEB), around 6.01% of its 13F portfolio. Sabrepoint Capital is also relatively very bullish on the stock, dishing out 4.66 percent of its 13F equity portfolio to SEB.
As industrywide interest jumped, specific money managers have been driving this bullishness. Harspring Capital Management, managed by Harry Gail, created the most outsized position in Seaboard Corporation (NYSE:SEB). Harspring Capital Management had $8.8 million invested in the company at the end of the quarter. John Murphy’s Levin Easterly Partners also made a $1 million investment in the stock during the quarter. The only other fund with a new position in the stock is John A. Levin’s Levin Capital Strategies.
Let’s now take a look at hedge fund activity in other stocks similar to Seaboard Corporation (NYSE:SEB). These stocks are PNM Resources, Inc. (NYSE:PNM), SelectQuote, Inc. (NYSE:SLQT), Schrodinger, Inc. (NASDAQ:SDGR), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Targa Resources Corp (NYSE:TRGP), AerCap Holdings N.V. (NYSE:AER), and Insmed Incorporated (NASDAQ:INSM). This group of stocks’ market caps are similar to SEB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNM | 23 | 385999 | -2 |
| SLQT | 14 | 217874 | -15 |
| SDGR | 24 | 402321 | 9 |
| RETA | 25 | 249642 | -9 |
| TRGP | 30 | 295180 | -1 |
| AER | 38 | 753690 | 8 |
| INSM | 28 | 555397 | -2 |
| Average | 26 | 408586 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $409 million. That figure was $121 million in SEB’s case. AerCap Holdings N.V. (NYSE:AER) is the most popular stock in this table. On the other hand SelectQuote, Inc. (NYSE:SLQT) is the least popular one with only 14 bullish hedge fund positions. Seaboard Corporation (NYSE:SEB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SEB is 37.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on SEB as the stock returned 16.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
