Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Sotera Health Company (NASDAQ:SHC) based on that data.
Is Sotera Health Company (NASDAQ:SHC) undervalued? Hedge funds were becoming more confident. The number of bullish hedge fund positions improved by 9 in recent months. Sotera Health Company (NASDAQ:SHC) was in 36 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Alex Litowitz of Magnetar Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Sotera Health Company (NASDAQ:SHC).
Do Hedge Funds Think SHC Is A Good Stock To Buy Now?
At Q1’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SHC over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sotera Health Company (NASDAQ:SHC) was held by Stockbridge Partners, which reported holding $198.9 million worth of stock at the end of December. It was followed by Holocene Advisors with a $63.8 million position. Other investors bullish on the company included Balyasny Asset Management, Point72 Asset Management, and Bridger Management. In terms of the portfolio weights assigned to each position Stockbridge Partners allocated the biggest weight to Sotera Health Company (NASDAQ:SHC), around 4.84% of its 13F portfolio. Bridger Management is also relatively very bullish on the stock, setting aside 3.64 percent of its 13F equity portfolio to SHC.
As industrywide interest jumped, specific money managers were breaking ground themselves. Stockbridge Partners, managed by Sharlyn C. Heslam, initiated the most outsized position in Sotera Health Company (NASDAQ:SHC). Stockbridge Partners had $198.9 million invested in the company at the end of the quarter. Roberto Mignone’s Bridger Management also initiated a $38.9 million position during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Alec Litowitz and Ross Laser’s Magnetar Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Sotera Health Company (NASDAQ:SHC). We will take a look at Exelixis, Inc. (NASDAQ:EXEL), United States Steel Corporation (NYSE:X), Vertiv Holdings Co (NYSE:VRT), Columbia Sportswear Company (NASDAQ:COLM), Toll Brothers Inc (NYSE:TOL), Prosperity Bancshares, Inc. (NYSE:PB), and MasTec, Inc. (NYSE:MTZ). This group of stocks’ market caps are similar to SHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXEL | 27 | 992164 | 3 |
| X | 22 | 635515 | -15 |
| VRT | 39 | 997190 | -11 |
| COLM | 21 | 185359 | 7 |
| TOL | 30 | 699227 | -4 |
| PB | 21 | 96958 | 5 |
| MTZ | 36 | 334673 | 4 |
| Average | 28 | 563012 | -1.6 |
View table here if you experience formatting issues.
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 $563 million. That figure was $610 million in SHC’s case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Columbia Sportswear Company (NASDAQ:COLM) is the least popular one with only 21 bullish hedge fund positions. Sotera Health Company (NASDAQ:SHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SHC is 81.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately SHC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SHC were disappointed as the stock returned -0.9% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
