While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding The Boston Beer Company Inc (NYSE:SAM).
The Boston Beer Company Inc (NYSE:SAM) shareholders have witnessed an increase in hedge fund interest in recent months. Our calculations also showed that sam isn’t among the 30 most popular stocks among hedge funds.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s view the new hedge fund action encompassing The Boston Beer Company Inc (NYSE:SAM).
What does the smart money think about The Boston Beer Company Inc (NYSE:SAM)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in SAM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of The Boston Beer Company Inc (NYSE:SAM), with a stake worth $111.4 million reported as of the end of March. Trailing AQR Capital Management was Fisher Asset Management, which amassed a stake valued at $75.2 million. Renaissance Technologies, Winton Capital Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names were breaking ground themselves. PDT Partners, managed by Peter Muller, initiated the largest position in The Boston Beer Company Inc (NYSE:SAM). PDT Partners had $3.9 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $2.9 million investment in the stock during the quarter. The following funds were also among the new SAM investors: Jeffrey Talpins’s Element Capital Management, Joel Greenblatt’s Gotham Asset Management, and David Costen Haley’s HBK Investments.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Boston Beer Company Inc (NYSE:SAM) but similarly valued. We will take a look at Spirit Realty Capital Inc (NYSE:SRC), FireEye Inc (NASDAQ:FEYE), Copa Holdings, S.A. (NYSE:CPA), and Merit Medical Systems, Inc. (NASDAQ:MMSI). This group of stocks’ market valuations are similar to SAM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRC | 17 | 301040 | -2 |
| FEYE | 27 | 365577 | -1 |
| CPA | 14 | 262939 | -1 |
| MMSI | 17 | 244449 | -1 |
| Average | 18.75 | 293501 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $387 million in SAM’s case. FireEye Inc (NASDAQ:FEYE) is the most popular stock in this table. On the other hand Copa Holdings, S.A. (NYSE:CPA) is the least popular one with only 14 bullish hedge fund positions. The Boston Beer Company Inc (NYSE:SAM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SAM as the stock returned 7.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
