The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded SEACOR Marine Holdings Inc. (NYSE:SMHI) based on those filings.
SEACOR Marine Holdings Inc. (NYSE:SMHI) investors should pay attention to a decrease in hedge fund sentiment recently. SEACOR Marine Holdings Inc. (NYSE:SMHI) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. There were 5 hedge funds in our database with SMHI holdings at the end of December. Our calculations also showed that SMHI 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. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John A. Levin of Levin Capital Strategies
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Keeping this in mind let's take a look at the recent hedge fund action encompassing SEACOR Marine Holdings Inc. (NYSE:SMHI).
Do Hedge Funds Think SMHI Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SMHI over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in SEACOR Marine Holdings Inc. (NYSE:SMHI) was held by Royce & Associates, which reported holding $1.2 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $0.2 million position. The only other hedge fund that is bullish on the company was Levin Capital Strategies.
Since SEACOR Marine Holdings Inc. (NYSE:SMHI) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that elected to cut their entire stakes in the first quarter. Interestingly, Israel Englander's Millennium Management dumped the biggest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $0.1 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as SEACOR Marine Holdings Inc. (NYSE:SMHI) but similarly valued. These stocks are Bank of South Carolina Corp. (NASDAQ:BKSC), Minerva Neurosciences, Inc (NASDAQ:NERV), Longeveron Inc. (NASDAQ:LGVN), LAIX Inc. (NYSE:LAIX), Check-Cap Ltd. (NASDAQ:CHEK), United States Antimony Corporation (NYSE:UAMY), and ENGlobal Corp (NASDAQ:ENG). This group of stocks' market valuations resemble SMHI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BKSC,1,449,0 NERV,10,8790,-2 LGVN,1,97,1 LAIX,3,936,1 CHEK,1,244,0 UAMY,3,240,1 ENG,3,1292,0 Average,3.1,1721,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in SMHI's case. Minerva Neurosciences, Inc (NASDAQ:NERV) is the most popular stock in this table. On the other hand Bank of South Carolina Corp. (NASDAQ:BKSC) is the least popular one with only 1 bullish hedge fund positions. SEACOR Marine Holdings Inc. (NYSE:SMHI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SMHI is 24.1. 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 negative signal and 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately SMHI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SMHI investors were disappointed as the stock returned -18.4% since the end of March (through 6/11) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.