The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded SIFCO Industries, Inc. (NYSE:SIF) based on those filings.
SIFCO Industries, Inc. (NYSE:SIF) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. 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 BSQUARE Corporation (NASDAQ:BSQR), Coffee Holding Co., Inc. (NASDAQ:JVA), and Comstock Holding Companies, Inc. (NASDAQ:CHCI) to gather more data points. Our calculations also showed that SIF isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jeffrey Bronchick of Cove Street Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the latest hedge fund action regarding SIFCO Industries, Inc. (NYSE:SIF).
How are hedge funds trading SIFCO Industries, Inc. (NYSE:SIF)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SIF over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cove Street Capital, managed by Jeffrey Bronchick, holds the largest position in SIFCO Industries, Inc. (NYSE:SIF). Cove Street Capital has a $0.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Minerva Advisors, managed by David P. Cohen, which holds a $0.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Chuck Royce’s Royce & Associates and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to SIFCO Industries, Inc. (NYSE:SIF), around 0.34% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to SIF.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SIFCO Industries, Inc. (NYSE:SIF) but similarly valued. These stocks are BSQUARE Corporation (NASDAQ:BSQR), Coffee Holding Co., Inc. (NASDAQ:JVA), Comstock Holding Companies, Inc. (NASDAQ:CHCI), and TransAtlantic Petroleum Ltd (NYSE:TAT). This group of stocks’ market caps resemble SIF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSQR | 1 | 882 | -1 |
| JVA | 2 | 1545 | -1 |
| CHCI | 2 | 501 | 1 |
| TAT | 2 | 6 | -1 |
| Average | 1.75 | 734 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.75 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in SIF’s case. Coffee Holding Co., Inc. (NASDAQ:JVA) is the most popular stock in this table. On the other hand BSQUARE Corporation (NASDAQ:BSQR) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks SIFCO Industries, Inc. (NYSE:SIF) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on SIF as the stock returned 60% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Sifco Industries Inc (NYSE:SIF)
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Disclosure: None. This article was originally published at Insider Monkey.
