Skyline Champion Corporation (SKY): Hedge Funds In Wait-and-See Mode

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Skyline Champion Corporation (NYSE:SKY).

Hedge fund interest in Skyline Champion Corporation (NYSE:SKY) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SKY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare SKY to other stocks including CNX Resources Corporation (NYSE:CNX), Alamos Gold Inc (NYSE:AGI), and Kennametal Inc. (NYSE:KMT) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the fresh hedge fund action surrounding Skyline Champion Corporation (NYSE:SKY).

Do Hedge Funds Think SKY Is A Good Stock To Buy Now?

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SKY over the last 24 quarters. 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, MAK Capital One was the largest shareholder of Skyline Champion Corporation (NYSE:SKY), with a stake worth $159.9 million reported as of the end of June. Trailing MAK Capital One was Driehaus Capital, which amassed a stake valued at $42.8 million. SG Capital Management, Royce & Associates, and Portolan Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to Skyline Champion Corporation (NYSE:SKY), around 31.77% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 7.21 percent of its 13F equity portfolio to SKY.

Seeing as Skyline Champion Corporation (NYSE:SKY) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their positions entirely by the end of the second quarter. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $1.5 million in stock. Warren Lammert’s fund, Granite Point Capital, also sold off its stock, about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Skyline Champion Corporation (NYSE:SKY). We will take a look at CNX Resources Corporation (NYSE:CNX), Alamos Gold Inc (NYSE:AGI), Kennametal Inc. (NYSE:KMT), Hilltop Holdings Inc. (NYSE:HTH), Jumia Technologies AG (NYSE:JMIA), Berkeley Lights, Inc. (NASDAQ:BLI), and Calix Inc (NYSE:CALX). This group of stocks’ market values resemble SKY’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $354 million in SKY’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Hilltop Holdings Inc. (NYSE:HTH) is the least popular one with only 8 bullish hedge fund positions. Skyline Champion Corporation (NYSE:SKY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SKY is 64.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on SKY as the stock returned 18.9% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.