We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of SLM Corp (NASDAQ:SLM) based on that data.
Is SLM a good stock to buy now? SLM Corp (NASDAQ:SLM) investors should be aware of a decrease in enthusiasm from smart money in recent months. SLM Corp (NASDAQ:SLM) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 39. Our calculations also showed that SLM 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Parag Vora of HG Vora Capital Management
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. Keeping this in mind let’s analyze the latest hedge fund action surrounding SLM Corp (NASDAQ:SLM).
Do Hedge Funds Think SLM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from the second quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in SLM a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, ValueAct Capital was the largest shareholder of SLM Corp (NASDAQ:SLM), with a stake worth $261.3 million reported as of the end of September. Trailing ValueAct Capital was Fir Tree, which amassed a stake valued at $98.9 million. GoldenTree Asset Management, HG Vora Capital Management, and Arrowstreet Capital 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 Impactive Capital allocated the biggest weight to SLM Corp (NASDAQ:SLM), around 12.19% of its 13F portfolio. GoldenTree Asset Management is also relatively very bullish on the stock, designating 5.06 percent of its 13F equity portfolio to SLM.
Judging by the fact that SLM Corp (NASDAQ:SLM) has experienced a decline in interest from hedge fund managers, it’s easy to see that there were a few money managers that elected to cut their entire stakes by the end of the third quarter. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital cut the biggest position of the 750 funds tracked by Insider Monkey, valued at close to $2.1 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $1.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 10 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SLM Corp (NASDAQ:SLM) but similarly valued. These stocks are Installed Building Products Inc (NYSE:IBP), Ormat Technologies, Inc. (NYSE:ORA), Companhia Paranaense de Energia (NYSE:ELP), nVent Electric plc (NYSE:NVT), MGIC Investment Corporation (NYSE:MTG), Qurate Retail, Inc. (NASDAQ:QRTEA), and M.D.C. Holdings, Inc. (NYSE:MDC). This group of stocks’ market caps are closest to SLM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBP | 20 | 116472 | -1 |
| ORA | 19 | 198924 | 0 |
| ELP | 6 | 21608 | -6 |
| NVT | 34 | 374896 | 7 |
| MTG | 41 | 314368 | 1 |
| QRTEA | 41 | 608143 | -2 |
| MDC | 25 | 135497 | 5 |
| Average | 26.6 | 252844 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $631 million in SLM’s case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia (NYSE:ELP) is the least popular one with only 6 bullish hedge fund positions. SLM Corp (NASDAQ:SLM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SLM is 34.8. 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 SLM as the stock returned 48.4% 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.
