Should You Buy Science Applications International Corp (SAIC)?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. 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 12 months ending on October 30. Sixty-three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Science Applications International Corp (NYSE:SAIC).

Science Applications International Corp (NYSE:SAIC) was in 20 hedge funds’ portfolios at the end of September. SAIC investors should be aware of an increase in enthusiasm from smart money lately. There were 18 hedge funds in our database with SAIC positions at the end of the previous quarter. 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 Entegris Inc (NASDAQ:ENTG), Black Hills Corp (NYSE:BKH), and Alliance Holdings GP, L.P. (NASDAQ:AHGP) to gather more data points.

According to most traders, hedge funds are perceived as unimportant, old investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our experts look at the moguls of this group, around 700 funds. Most estimates calculate that this group of people shepherd bulk of all hedge funds’ total capital, and by keeping track of their first-class stock picks, Insider Monkey has uncovered a number of investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, let’s check out the new action surrounding Science Applications International Corp (NYSE:SAIC).

Hedge fund activity in Science Applications International Corp (NYSE:SAIC)

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Huber Capital Management, managed by Joe Huber, holds the number one position in Science Applications International Corp (NYSE:SAIC). Huber Capital Management has a $31.4 million position in the stock, comprising 1.1% of its 13F portfolio. On Huber Capital Management’s heels is D. E. Shaw of D E Shaw, with a $23.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Science Applications International Corp (NYSE:SAIC) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most valuable position in Science Applications International Corp (NYSE:SAIC). Adage Capital Management had $14.4 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also initiated a $9.1 million position during the quarter. The other funds with brand new SAIC positions are Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management, Peter Muller’s PDT Partners, and Clint Carlson’s Carlson Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Science Applications International Corp (NYSE:SAIC) but similarly valued. These stocks are Entegris Inc (NASDAQ:ENTG), Black Hills Corp (NYSE:BKH), Alliance Holdings GP, L.P. (NASDAQ:AHGP), and Dominion Midstream Partners LP (NYSE:DM). This group of stocks’ market caps resemble SAIC’s market cap.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $140 million. That figure was $126 million in SAIC’s case. Entegris Inc (NASDAQ:ENTG) is the most popular stock in this table. On the other hand Dominion Midstream Partners LP (NYSE:DM) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Science Applications International Corp (NYSE:SAIC) 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.