Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Simpson Manufacturing Co, Inc. (NYSE:SSD) investors should be aware of a decrease in hedge fund sentiment lately. At the end of this article, we will also compare Simpson Manufacturing Co, Inc. (NYSE:SSD) to other stocks, including Alliance Resource Partners, L.P. (NASDAQ:ARLP), Hillenbrand, Inc. (NYSE:HI), and New York REIT Inc (NYSE:NYRT) to get a better sense of its popularity.
Follow Simpson Manufacturing Co. Inc. (NYSE:SSD)
Follow Simpson Manufacturing Co. Inc. (NYSE:SSD)
In today’s marketplace, there are a lot of gauges market participants use to size up stocks. A couple of the best gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace the market by a solid margin (see the details here).
Now, let’s analyze the recent action encompassing Simpson Manufacturing Co, Inc. (NYSE:SSD).
What does the smart money think about Simpson Manufacturing Co, Inc. (NYSE:SSD)?
At the end of the third quarter, a total of an 8 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 20% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund and institutional investor database, Chuck Royce’s Royce & Associates has the number one position in Simpson Manufacturing Co, Inc. (NYSE:SSD), worth close to $61 million, corresponding to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Joshua Friedman and Mitchell Julis of Canyon Capital Advisors, with a $16.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Renaissance Technologies, D E Shaw, and Ken Griffin’s Citadel Investment Group.
Seeing as Simpson Manufacturing Co, Inc. (NYSE:SSD) has witnessed a bearish sentiment from the smart money, logic holds that there is a sect of funds that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management sold off the biggest stake of all the hedgies followed by Insider Monkey, valued at about $5.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $3 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Simpson Manufacturing Co, Inc. (NYSE:SSD) but similarly valued. We will take a look at Alliance Resource Partners, L.P. (NASDAQ:ARLP), Hillenbrand, Inc. (NYSE:HI), New York REIT Inc (NYSE:NYRT), and Haemonetics Corporation (NYSE:HAE). This group of stocks’ market values resembles Simpson Manufacturing Co, Inc. (NYSE:SSD)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARLP | 5 | 21423 | -1 |
| HI | 20 | 70529 | -1 |
| NYRT | 16 | 40286 | -4 |
| HAE | 11 | 39857 | 1 |
As you can see, these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $186 million in Simpson Manufacturing Co, Inc. (NYSE:SSD)’s case. Hillenbrand, Inc. (NYSE:HI) is the most popular stock in this table. On the other hand, Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 5 bullish hedge fund positions. Simpson Manufacturing Co, Inc. (NYSE:SSD) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Hillenbrand, Inc. (NYSE:HI) might be a better candidate to consider a long position.
