At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Summer Infant, Inc. (NASDAQ:SUMR) makes for a good investment right now.
Summer Infant, Inc. (NASDAQ:SUMR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of March. Our calculations also showed that SUMR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SUMR to other stocks including AmpliTech Group, Inc. (NASDAQ:AMPG), Reliance Global Group, Inc. (NASDAQ:RELI), and Carver Bancorp, Inc. (NASDAQ:CARV) to get a better sense of its popularity.
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.
Nelson Obus of Wynnefield Capital
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 stockfor $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 we're going to take a gander at the fresh hedge fund action surrounding Summer Infant, Inc. (NASDAQ:SUMR).
Do Hedge Funds Think SUMR Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 2 hedge funds with a bullish position in SUMR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Wynnefield Capital was the largest shareholder of Summer Infant, Inc. (NASDAQ:SUMR), with a stake worth $10.1 million reported as of the end of March. Trailing Wynnefield Capital was Plaisance Capital, which amassed a stake valued at $1.2 million. Renaissance Technologies was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to Summer Infant, Inc. (NASDAQ:SUMR), around 5.06% of its 13F portfolio. Plaisance Capital is also relatively very bullish on the stock, setting aside 1.17 percent of its 13F equity portfolio to SUMR.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Summer Infant, Inc. (NASDAQ:SUMR) but similarly valued. These stocks are AmpliTech Group, Inc. (NASDAQ:AMPG), Reliance Global Group, Inc. (NASDAQ:RELI), Carver Bancorp, Inc. (NASDAQ:CARV), GeoVax Labs, Inc. (NASDAQ:GOVX), Optical Cable Corporation (NASDAQ:OCC), Emerson Radio Corp (NYSE:MSN), and BIO-key International, Inc. (NASDAQ:BKYI). All of these stocks' market caps match SUMR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMPG,2,1591,2 RELI,2,529,2 CARV,2,317,2 GOVX,1,330,-2 OCC,2,533,1 MSN,2,1401,1 BKYI,3,268,0 Average,2,710,0.9 [/table]
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $12 million in SUMR's case. BIO-key International, Inc. (NASDAQ:BKYI) is the most popular stock in this table. On the other hand GeoVax Labs, Inc. (NASDAQ:GOVX) is the least popular one with only 1 bullish hedge fund positions. Summer Infant, Inc. (NASDAQ:SUMR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SUMR is 70. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately SUMR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SUMR were disappointed as the stock returned -2% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
