Spectrum Brands Holdings, Inc. (SPB): Are Hedge Funds Right About This Stock?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Spectrum Brands Holdings, Inc. (NYSE:SPB).

Spectrum Brands Holdings, Inc. (NYSE:SPB) investors should pay attention to an increase in enthusiasm from smart money recently. SPB was in 30 hedge funds’ portfolios at the end of the third quarter of 2016. There were 23 hedge funds in our database with SPB holdings 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 Crown Holdings, Inc. (NYSE:CCK), Qorvo Inc (NASDAQ:QRVO), and HD Supply Holdings Inc (NASDAQ:HDS) to gather more data points.

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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With all of this in mind, let’s take a glance at the new action encompassing Spectrum Brands Holdings, Inc. (NYSE:SPB).

How have hedgies been trading Spectrum Brands Holdings, Inc. (NYSE:SPB)?

Heading into the fourth quarter of 2016, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Brahman Capital, managed by Peter Adam Hochfelder, holds the largest position in Spectrum Brands Holdings, Inc. (NYSE:SPB). Brahman Capital has a $221.4 million position in the stock, comprising 7.8% of its 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $107.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Robert Boucai’s Newbrook Capital Advisors, Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management.

Consequently, some big names have jumped into Spectrum Brands Holdings, Inc. (NYSE:SPB) headfirst. Gotham Asset Management, managed by Joel Greenblatt, initiated the most valuable position in Spectrum Brands Holdings, Inc. (NYSE:SPB). Gotham Asset Management had $13.7 million invested in the company at the end of the quarter. Michael Platt and William Reeves’ BlueCrest Capital Mgmt. also made a $7.4 million investment in the stock during the quarter. The following funds were also among the new SPB investors: Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Lee Ainslie’s Maverick Capital, and Noam Gottesman’s GLG Partners.

Let’s go over hedge fund activity in other stocks similar to Spectrum Brands Holdings, Inc. (NYSE:SPB). These stocks are Crown Holdings, Inc. (NYSE:CCK), Qorvo Inc (NASDAQ:QRVO), HD Supply Holdings Inc (NASDAQ:HDS), and KT Corporation (ADR) (NYSE:KT). This group of stocks’ market valuations match SPB’s market valuation.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $716 million. That figure was $616 million in SPB’s case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand KT Corporation (ADR) (NYSE:KT) is the least popular one with only 10 bullish hedge fund positions. Spectrum Brands Holdings, Inc. (NYSE:SPB) 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 HDS might be a better candidate to consider a long position.