Is Snap-on Incorporated (NYSE:SNA) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Snap-on Incorporated (NYSE:SNA) a first-rate investment right now? The smart money is buying. The number of long hedge fund bets inched up by 8 recently. Our calculations also showed that SNA isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to analyze the recent hedge fund action regarding Snap-on Incorporated (NYSE:SNA).
Hedge fund activity in Snap-on Incorporated (NYSE:SNA)
Heading into the fourth quarter of 2018, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in SNA at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John W. Rogers’s Ariel Investments has the number one position in Snap-on Incorporated (NYSE:SNA), worth close to $168.9 million, accounting for 1.9% of its total 13F portfolio. On Ariel Investments’s heels is Cliff Asness of AQR Capital Management, with a $108.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Jeffrey Gates’s Gates Capital Management, Steven Richman’s East Side Capital (RR Partners) and Richard S. Pzena’s Pzena Investment Management.
As industrywide interest jumped, key money managers were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, initiated the most outsized position in Snap-on Incorporated (NYSE:SNA). GLG Partners had $6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $5.2 million position during the quarter. The other funds with brand new SNA positions are Dmitry Balyasny’s Balyasny Asset Management, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Snap-on Incorporated (NYSE:SNA). These stocks are Grupo Televisa SAB (NYSE:TV), Juniper Networks, Inc. (NYSE:JNPR), Athene Holding Ltd. (NYSE:ATH), and Fibria Celulose SA (NYSE:FBR). All of these stocks’ market caps are similar to SNA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TV | 19 | 1160529 | 2 |
| JNPR | 23 | 693266 | -4 |
| ATH | 42 | 1775251 | 6 |
| FBR | 6 | 179071 | -1 |
| Average | 22.5 | 952029 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $952 million. That figure was $605 million in SNA’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand Fibria Celulose SA (NYSE:FBR) is the least popular one with only 6 bullish hedge fund positions. Snap-on Incorporated (NYSE:SNA) 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 ATH might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
