Is Stoneridge, Inc. (NYSE:SRI) Worthy of Your Portfolio?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

In this article, we are going to take a closer look at the hedge fund sentiment towards Stoneridge, Inc. (NYSE:SRI). Overall, the company registered an increase in popularity, since the number of funds from our database long the stock advanced to 24 from 21 between July and September. However, 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 Actua Corp (NASDAQ:ACTA), SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), and XO Group Inc (NYSE:XOXO) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to take a look at the latest action encompassing Stoneridge, Inc. (NYSE:SRI).

Hedge fund activity in Stoneridge, Inc. (NYSE:SRI)

Heading into the fourth quarter of 2016, a total of 24 funds tracked by Insider Monkey were bullish on this stock, up by 14% over the quarter. Below, you can check out the change in hedge fund sentiment towards SRI over the last five quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the number one position in Stoneridge, Inc. (NYSE:SRI), worth close to $26.9 million, corresponding to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies, which holds a $10 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of Gregg J. Powers’s Private Capital Management, Robert B. Gillam’s McKinley Capital Management, and Michael O’Keefe’s 12th Street Asset Management. We should note that 12th Street Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Stoneridge, Inc. (NYSE:SRI). Arrowstreet Capital had $2.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The only other fund with a brand new SRI position is Neil Chriss’ Hutchin Hill Capital.

Let’s check out hedge fund activity in other stocks similar to Stoneridge, Inc. (NYSE:SRI). We will take a look at Actua Corp (NASDAQ:ACTA), SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN), XO Group Inc (NYSE:XOXO), and General Communication, Inc. (NASDAQ:GNCMA). This group of stocks’ market caps are similar to SRI’s market cap.

As you can see these stocks had an average of 13 funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $100 million in SRI’s case. SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN) is the most popular stock in this table. On the other hand General Communication, Inc. (NASDAQ:GNCMA) is the least popular one with only seven funds holding shares. Compared to these stocks Stoneridge, Inc. (NYSE:SRI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none