At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Steel Partners Holdings LP (NYSE:SPLP) makes for a good investment right now.
Is Steel Partners Holdings LP (NYSE:SPLP) a buy, sell, or hold? Prominent investors are becoming less hopeful. The number of long hedge fund positions retreated by 1 in recent months. Our calculations also showed that SPLP isn’t among the 30 most popular stocks among hedge funds (see the video below). SPLP was in 5 hedge funds’ portfolios at the end of the second quarter of 2019. There were 6 hedge funds in our database with SPLP holdings at the end of the previous quarter.
Video: Click the image to 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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. We’re going to take a glance at the recent hedge fund action surrounding Steel Partners Holdings LP (NYSE:SPLP).
What have hedge funds been doing with Steel Partners Holdings LP (NYSE:SPLP)?
At the end of the second quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SPLP over the last 16 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Steel Partners Holdings LP (NYSE:SPLP) was held by Steel Partners, which reported holding $27.8 million worth of stock at the end of March. It was followed by Fondren Management with a $1.9 million position. Other investors bullish on the company included GAMCO Investors, Renaissance Technologies, and MFP Investors.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified SPLP as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Steel Partners Holdings LP (NYSE:SPLP) but similarly valued. These stocks are Noodles & Co (NASDAQ:NDLS), Cross Country Healthcare, Inc. (NASDAQ:CCRN), Business First Bancshares, Inc. (NASDAQ:BFST), and Forum Energy Technologies Inc (NYSE:FET). All of these stocks’ market caps are similar to SPLP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NDLS | 12 | 89582 | -5 |
| CCRN | 8 | 23148 | 0 |
| BFST | 1 | 16390 | 0 |
| FET | 19 | 58008 | 3 |
| Average | 10 | 46782 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $31 million in SPLP’s case. Forum Energy Technologies Inc (NYSE:FET) is the most popular stock in this table. On the other hand Business First Bancshares, Inc. (NASDAQ:BFST) is the least popular one with only 1 bullish hedge fund positions. Steel Partners Holdings LP (NYSE:SPLP) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SPLP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SPLP investors were disappointed as the stock returned -8.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
