Seaspan Corporation (NYSE:SSW) is 9.6% in the red after the company announced that it plans to offer 5 million shares of its common stock in a secondary offering. The underwriters also have the choice to purchase 750,000 additional shares. Seaspan Corporation (NYSE:SSW) hopes to use the around $85 million in proceeds to redeem some of its preferred shares. Seaspan shares currently trade at 13.5 times forward earnings estimates and pay a 9.2% dividend yield. The stock was in the green year-to-date before today’s retreat. However, the stock’s decline will not affect the returns of most hedge funds’ returns, since Seaspan Corporation (NYSE:SSW) was included in the equity portfolio of just four funds at the end of March. Nevertheless, during the first quarter, the number of funds with long positions in Seaspan (among the funds tracked by Insider Monkey) went up by two.
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Follow Seaspan Corp (NYSE:SSW)
To most market participants, hedge funds are viewed as worthless, outdated investment tools of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the upper echelon of this club, approximately 700 funds. These money managers handle most of the smart money’s total asset base, and by paying attention to their top stock picks, Insider Monkey has uncovered a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, we’re going to take a peek at the latest action encompassing Seaspan Corporation (NYSE:SSW).
According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the biggest position in Seaspan Corporation (NYSE:SSW), worth close to $21.6 million, accounting for less than 0.1% of its total 13F portfolio. The second largest stake is held by PEAK6 Capital Management, led by Matthew Hulsizer, holding a $0.6 million ‘call’ position; less than 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Ken Griffin’s Citadel Investment Group, David E. Shaw’s D E Shaw and Matthew Hulsizer’s PEAK6 Capital Management.
On the next page, we are going to take a look a the investors with new stakes in Seaspan Corporation. In addition, since 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 we will examine companies such as Tumi Holdings Inc (NYSE:TUMI), Mine Safety Appliances (NYSE:MSA), and Sanmina Corp (NASDAQ:SANM) to gather more data points.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. PEAK6 Capital Management initiated the largest call position in Seaspan Corporation (NYSE:SSW). PEAK6 Capital Management had $0.6 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also initiated a $0.3 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to Seaspan Corporation (NYSE:SSW). These stocks are Tumi Holdings Inc (NYSE:TUMI), Mine Safety Appliances (NYSE:MSA), Sanmina Corp (NASDAQ:SANM), and Vishay Intertechnology (NYSE:VSH). This group of stocks’ market values are closest to SSW’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TUMI | 22 | 303227 | 12 |
| MSA | 10 | 31578 | 0 |
| SANM | 19 | 101828 | 4 |
| VSH | 17 | 282575 | 0 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $23 million in SSW’s case. Tumi Holdings Inc (NYSE:TUMI) is the most popular stock in this table. On the other hand Mine Safety Appliances (NYSE:MSA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Seaspan Corporation (NYSE:SSW) is even less popular than MSA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
