Seneca Foods Corp (SENEA): Are Hedge Funds Right About This Stock?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Seneca Foods Corp (NASDAQ:SENEA) from the perspective of those elite funds.

Seneca Foods Corp (NASDAQ:SENEA) shareholders have witnessed an increase in support from the world’s most elite money managers recently. At the end of this article we will also compare SENEA to other stocks including Digimarc Corp (NASDAQ:DMRC), CNX Coal Resources LP (NYSE:CNXC), and Syneron Medical Ltd. (NASDAQ:ELOS) to get a better sense of its popularity.

In the eyes of most investors, hedge funds are perceived as underperforming, outdated financial tools of yesteryear. While there are over 8000 funds trading at the moment, We look at the crème de la crème of this group, approximately 700 funds. Most estimates calculate that this group of people watch over most of the smart money’s total asset base, and by paying attention to their first-class picks, Insider Monkey has brought to light several investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to take a look at the key action surrounding Seneca Foods Corp (NASDAQ:SENEA).

How are hedge funds trading Seneca Foods Corp (NASDAQ:SENEA)?

Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s database, Royce & Associates, managed by Chuck Royce, holds the number one position in Seneca Foods Corp (NASDAQ:SENEA). Royce & Associates has an $13.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies holding an $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Paul J. Isaac’s Arbiter Partners Capital Management.

As aggregate interest increased, specific money managers have been driving this bullishness. Millennium Managemen assembled the most valuable position in Seneca Foods Corp (NASDAQ:SENEA). Millennium Management had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made an $0.3 million investment in the stock during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Seneca Foods Corp (NASDAQ:SENEA) but similarly valued. These stocks are Digimarc Corp (NASDAQ:DMRC), CNX Coal Resources LP (NYSE:CNXC), Syneron Medical Ltd. (NASDAQ:ELOS), and Compugen Ltd. (USA) (NASDAQ:CGEN). This group of stocks’ market caps match SENEA’s market cap.

As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $48 million, compared to $16 million in SENEA’s case. Syneron Medical Ltd. (NASDAQ:ELOS) is the most popular stock in this table. On the other hand Compugen Ltd. (USA) (NASDAQ:CGEN) is the least popular one with only 4 bullish hedge fund positions. Seneca Foods Corp (NASDAQ:SENEA) 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 ELOS might be a better candidate to consider a long position.