Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Smith & Wesson Holding Corporation (NASDAQ:SWHC).
Smith & Wesson Holding Corporation (NASDAQ:SWHC) has experienced an increase in hedge fund sentiment recently. SWHC was in 30 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with SWHC positions at the end of the previous quarter. At the end of this article we will also compare SWHC to other stocks, including Infinity Property and Casualty Corp. (NASDAQ:IPCC), Canadian Solar Inc. (NASDAQ:CSIQ), and Repligen Corporation (NASDAQ:RGEN) to get a better sense of its popularity.
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In today’s marketplace there are many signals stock traders employ to evaluate publicly traded companies. Two of the most under-the-radar signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform their index-focused peers by a significant margin (see the details here).
With all of this in mind, we’re going to analyze the new action surrounding Smith & Wesson Holding Corporation (NASDAQ:SWHC).
What have hedge funds been doing with Smith & Wesson Holding Corporation (NASDAQ:SWHC)?
Heading into Q4, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 36% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the most valuable position in Smith & Wesson Holding Corporation (NASDAQ:SWHC). The fund has a $20.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Gotham Asset Management, managed by Joel Greenblatt, which holds a $18.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass D. E. Shaw’s D E Shaw, Chuck Royce’s Royce & Associates and Peter S. Park’s Park West Asset Management.
As one would reasonably expect, some big names have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the biggest position in Smith & Wesson Holding Corporation (NASDAQ:SWHC). According to its latest 13F filing, the fund had $8.8 million invested in the company at the end of the quarter. Christopher A. Winham’s Tide Point Capital also made a $6.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert B. Gillam’s McKinley Capital Management, David Costen Haley’s HBK Investments, and Chao Ku’s Nine Chapters Capital Management.
Let’s go over hedge fund activity in other stocks similar to Smith & Wesson Holding Corporation (NASDAQ:SWHC). We will take a look at Infinity Property and Casualty Corp. (NASDAQ:IPCC), Canadian Solar Inc. (NASDAQ:CSIQ), Repligen Corporation (NASDAQ:RGEN), and Green Dot Corporation (NYSE:GDOT). This group of stocks’ market values are closest to SWHC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPCC | 8 | 70045 | 0 |
| CSIQ | 22 | 106081 | -10 |
| RGEN | 14 | 65400 | 0 |
| GDOT | 16 | 129141 | -8 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $150 million in SWHC’s case. Canadian Solar Inc. (NASDAQ:CSIQ) is the most popular stock in this table. On the other hand Infinity Property and Casualty Corp. (NASDAQ:IPCC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Smith & Wesson Holding Corporation (NASDAQ:SWHC) 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.
