It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like State National Companies Inc (NASDAQ:SNC) .
Hedge fund interest in State National Companies Inc (NASDAQ:SNC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SNC to other stocks including Westwood Holdings Group, Inc. (NYSE:WHG), Dorchester Minerals LP (NASDAQ:DMLP), and Chuy’s Holdings Inc (NASDAQ:CHUY) to get a better sense of its popularity.
Follow State National Companies Inc. (TSE:SNC)
Follow State National Companies Inc. (TSE:SNC)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Now, we’re going to review the recent action surrounding State National Companies Inc (NASDAQ:SNC).
Hedge fund activity in State National Companies Inc (NASDAQ:SNC)
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SNC over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Centerbridge Partners, led by Mark T. Gallogly, holds the most valuable position in State National Companies Inc (NASDAQ:SNC). Centerbridge Partners has a $46.1 million position in the stock, comprising 3.8% of its 13F portfolio. Sitting at the No. 2 spot is Brett Hendrickson of Nokomis Capital, with a $12.6 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Renaissance Technologies, one of the largest hedge funds in the world, John D. Gillespie’s Prospector Partners and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. At the top of the heap, Michael Lowenstein’s Kensico Capital cut the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $7.2 million in stock. Louis Navellier’s fund, Navellier & Associates, also said goodbye to its stock, about $0.3 million worth.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as State National Companies Inc (NASDAQ:SNC) but similarly valued. We will take a look at Westwood Holdings Group, Inc. (NYSE:WHG), Dorchester Minerals LP (NASDAQ:DMLP), Chuy’s Holdings Inc (NASDAQ:CHUY), and Citizens, Inc. (NYSE:CIA). This group of stocks’ market values resemble SNC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WHG | 5 | 74676 | 1 |
| DMLP | 4 | 15451 | 0 |
| CHUY | 11 | 26867 | 2 |
| CIA | 6 | 19500 | 2 |
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $68 million in SNC’s case. Chuy’s Holdings Inc (NASDAQ:CHUY) is the most popular stock in this table. On the other hand Dorchester Minerals LP (NASDAQ:DMLP) is the least popular one with only 4 bullish hedge fund positions. State National Companies Inc (NASDAQ:SNC) 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 CHUY might be a better candidate to consider taking a long position in.
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Disclosure: None
