In this article we will check out the progression of hedge fund sentiment towards U.S. Silica Holdings Inc (NYSE:SLCA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
U.S. Silica Holdings Inc (NYSE:SLCA) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. SLCA investors should pay attention to an increase in hedge fund interest in recent months. There were 17 hedge funds in our database with SLCA holdings at the end of June. Our calculations also showed that SLCA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to analyze the fresh hedge fund action regarding U.S. Silica Holdings Inc (NYSE:SLCA).
Do Hedge Funds Think SLCA Is A Good Stock To Buy Now?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SLCA over the last 25 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.
The largest stake in U.S. Silica Holdings Inc (NYSE:SLCA) was held by Renaissance Technologies, which reported holding $35.3 million worth of stock at the end of September. It was followed by Ariel Investments with a $15 million position. Other investors bullish on the company included D E Shaw, Royce & Associates, and Woodson Capital Management. In terms of the portfolio weights assigned to each position Hill City Capital allocated the biggest weight to U.S. Silica Holdings Inc (NYSE:SLCA), around 1.12% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 0.8 percent of its 13F equity portfolio to SLCA.
As aggregate interest increased, specific money managers were breaking ground themselves. Woodson Capital Management, managed by James Woodson Davis, established the largest position in U.S. Silica Holdings Inc (NYSE:SLCA). Woodson Capital Management had $4.8 million invested in the company at the end of the quarter. Ali Motamed’s Invenomic Capital Management also initiated a $2.5 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Karim Abbadi and Edward McBride’s Centiva Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as U.S. Silica Holdings Inc (NYSE:SLCA) but similarly valued. These stocks are Chatham Lodging Trust (NYSE:CLDT), Perion Network Ltd (NASDAQ:PERI), BIT Mining Limited (NYSE:BTCM), Spero Therapeutics (NASDAQ:SPRO), Vectrus Inc (NYSE:VEC), Re/Max Holdings Inc (NYSE:RMAX), and Gritstone Oncology, Inc. (NASDAQ:GRTS). This group of stocks’ market valuations resemble SLCA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLDT | 15 | 40009 | 1 |
| PERI | 18 | 114468 | 0 |
| BTCM | 6 | 32299 | 6 |
| SPRO | 4 | 135430 | -1 |
| VEC | 15 | 47061 | 1 |
| RMAX | 8 | 47238 | -1 |
| GRTS | 14 | 202874 | -3 |
| Average | 11.4 | 88483 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $88 million in SLCA’s case. Perion Network Ltd (NASDAQ:PERI) is the most popular stock in this table. On the other hand Spero Therapeutics (NASDAQ:SPRO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks U.S. Silica Holdings Inc (NYSE:SLCA) is more popular among hedge funds. Our overall hedge fund sentiment score for SLCA is 73.7. 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 returned 29.6% in 2021 and managed to beat the market by 3.6 percentage points. Hedge funds were also right about betting on SLCA as the stock returned 17.6% since the end of September (through 12/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow U.s. Silica Holdings Inc. (NYSE:SLCA)
Follow U.s. Silica Holdings Inc. (NYSE:SLCA)
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Disclosure: None. This article was originally published at Insider Monkey.
