Is Simpson Manufacturing Co, Inc. (SSD) Going to Burn These Hedge Funds?

Nina Todic
Updated

Before we spend many hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Simpson Manufacturing Co, Inc. (NYSE:SSD).

Simpson Manufacturing Co, Inc. (NYSE:SSD) investors should pay attention to an increase in hedge fund interest lately. Our calculations also showed that ssd isn't among the 30 most popular stocks among hedge funds.

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES
RENAISSANCE TECHNOLOGIES

We're going to check out the recent hedge fund action encompassing Simpson Manufacturing Co, Inc. (NYSE:SSD).

How are hedge funds trading Simpson Manufacturing Co, Inc. (NYSE:SSD)?

At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in SSD heading into this year. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

No of Hedge Funds with SSD Positions
No of Hedge Funds with SSD Positions

According to Insider Monkey's hedge fund database, Ariel Investments, managed by John W. Rogers, holds the number one position in Simpson Manufacturing Co, Inc. (NYSE:SSD). Ariel Investments has a $128.6 million position in the stock, comprising 1.4% of its 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $46.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Israel Englander's Millennium Management, Ed Bosek's BeaconLight Capital and Jim Simons's Renaissance Technologies.

As one would reasonably expect, key hedge funds have jumped into Simpson Manufacturing Co, Inc. (NYSE:SSD) headfirst. Gotham Asset Management, managed by Joel Greenblatt, established the most valuable position in Simpson Manufacturing Co, Inc. (NYSE:SSD). Gotham Asset Management had $0.9 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron's Algert Coldiron Investors, Jeffrey Talpins's Element Capital Management, and John Overdeck and David Siegel's Two Sigma Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Simpson Manufacturing Co, Inc. (NYSE:SSD) but similarly valued. These stocks are SYNNEX Corporation (NYSE:SNX), NCR Corporation (NYSE:NCR), Trinseo S.A. (NYSE:TSE), and Cornerstone OnDemand, Inc. (NASDAQ:CSOD). This group of stocks' market values are similar to SSD's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNX,17,205450,4 NCR,17,123213,1 TSE,18,208871,1 CSOD,28,784531,7 Average,20,330516,3.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $236 million in SSD's case. Cornerstone OnDemand, Inc. (NASDAQ:CSOD) is the most popular stock in this table. On the other hand SYNNEX Corporation (NYSE:SNX) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Simpson Manufacturing Co, Inc. (NYSE:SSD) is even less popular than SNX. 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. This article was originally published at Insider Monkey.

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