It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Santander Consumer USA Holdings Inc (NYSE:SC).
Is Santander Consumer USA Holdings Inc (NYSE:SC) a buy right now? Prominent investors are getting more optimistic. The number of long hedge fund bets rose by 1 lately. At the end of this article we will also compare SC to other stocks including Microsemi Corporation (NASDAQ:MSCC), BBVA Banco Frances S.A. (ADR) (NYSE:BFR), and CONSOL Energy Inc. (NYSE:CNX) to get a better sense of its popularity.
Follow Santander Consumer Usa Holdings Inc. (NYSE:SC)
Follow Santander Consumer Usa Holdings Inc. (NYSE:SC)
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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Now, let’s take a glance at the key action regarding Santander Consumer USA Holdings Inc (NYSE:SC).
What does the smart money think about Santander Consumer USA Holdings Inc (NYSE:SC)?
Heading into the fourth quarter of 2016, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Amit Nitin Doshi’s Harbor Spring Capital has the biggest position in Santander Consumer USA Holdings Inc (NYSE:SC), worth close to $48.4 million, amounting to 9.4% of its total 13F portfolio. The second most bullish fund manager is Jeffrey Tannenbaum of Fir Tree, with a $44.5 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Robert Pohly’s Samlyn Capital, Clint Carlson’s Carlson Capital and Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors.
Consequently, some big names were breaking ground themselves. Carlson Capital, managed by Clint Carlson, assembled the biggest position in Santander Consumer USA Holdings Inc (NYSE:SC). Carlson Capital had $36.6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $5.2 million position during the quarter. The following funds were also among the new SC investors: Glenn Russell Dubin’s Highbridge Capital Management, Israel Englander’s Millennium Management, and Anand Parekh’s Alyeska Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Santander Consumer USA Holdings Inc (NYSE:SC). These stocks are Microsemi Corporation (NASDAQ:MSCC), BBVA Banco Frances S.A. (ADR) (NYSE:BFR), CONSOL Energy Inc. (NYSE:CNX), and Vermilion Energy Inc (NYSE:VET). This group of stocks’ market values are closest to SC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSCC | 25 | 189632 | 6 |
| BFR | 11 | 52797 | 1 |
| CNX | 38 | 1774058 | 4 |
| VET | 8 | 10451 | 0 |
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $507 million. That figure was $316 million in SC’s case. CONSOL Energy Inc. (NYSE:CNX) is the most popular stock in this table. On the other hand Vermilion Energy Inc (NYSE:VET) is the least popular one with only 8 bullish hedge fund positions. Santander Consumer USA Holdings Inc (NYSE:SC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CNX might be a better candidate to consider a long position.
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Disclosure: None
