Is SG Blocks, Inc. (SGBX) A Good Stock To Buy Now?

In this article we are going to use hedge fund sentiment as a tool and determine whether SG Blocks, Inc. (NASDAQ:SGBX) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is SGBX a good stock to buy? SG Blocks, Inc. (NASDAQ:SGBX) has seen an increase in enthusiasm from smart money recently. SG Blocks, Inc. (NASDAQ:SGBX) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 2 hedge funds in our database with SGBX positions at the end of the fourth quarter. Our calculations also showed that SGBX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most shareholders, hedge funds are viewed as worthless, outdated investment tools of years past. While there are over 8000 funds trading at present, Our researchers look at the masters of this group, approximately 850 funds. These hedge fund managers command most of all hedge funds’ total asset base, and by watching their finest stock picks, Insider Monkey has unearthed many investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. Keeping this in mind we’re going to take a peek at the latest hedge fund action regarding SG Blocks, Inc. (NASDAQ:SGBX).

Do Hedge Funds Think SGBX Is A Good Stock To Buy Now?

At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in SGBX a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in SG Blocks, Inc. (NASDAQ:SGBX) was held by Intrinsic Edge Capital, which reported holding $0.5 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $0.4 million position. The only other hedge fund that is bullish on the company was Schonfeld Strategic Advisors.

As one would reasonably expect, key money managers have jumped into SG Blocks, Inc. (NASDAQ:SGBX) headfirst. Renaissance Technologies, created the most valuable position in SG Blocks, Inc. (NASDAQ:SGBX). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SG Blocks, Inc. (NASDAQ:SGBX) but similarly valued. We will take a look at Bel Fuse, Inc. (NASDAQ:BELFA), IMAC Holdings, Inc. (NASDAQ:IMAC), Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN), Medley Management Inc (NYSE:MDLY), Positive Physicians Holdings, Inc. (NASDAQ:PPHI), Duos Technologies Group, Inc. (NASDAQ:DUOT), and The OLB Group, Inc. (NASDAQ:OLB). This group of stocks’ market valuations are similar to SGBX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in SGBX’s case. Bel Fuse, Inc. (NASDAQ:BELFA) is the most popular stock in this table. On the other hand Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN) is the least popular one with only 1 bullish hedge fund positions. SG Blocks, Inc. (NASDAQ:SGBX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SGBX is 69.3. 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. 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 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately SGBX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SGBX were disappointed as the stock returned -10.3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.