Concerns over a shift in the Fed’s easy monetary policy hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, the Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25 and October 30. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in small-cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the even more extreme correction in the Russell 2000. In this article, we will take a closer look at how hedge funds traded Mobileye NV (NYSE:MBLY) during the turbulent quarter.
Is Mobileye NV (NYSE:MBLY) worth your attention right now? Hedge funds are becoming less hopeful. The number of long hedge fund positions were trimmed by 7 in Q3. 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 at the end of this article we will examine companies such as Ally Financial Inc (NYSE:ALLY), CMS Energy Corporation (NYSE:CMS), and Coty Inc (NYSE:COTY) to gather more data points.
In the financial world there are a multitude of signals investors can use to appraise stocks. Two of the less utilized signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top fund managers can outclass the broader indices by a significant margin (see the details here).
With all of this in mind, let’s take a gander at the latest action encompassing Mobileye NV (NYSE:MBLY).
What have hedge funds been doing with Mobileye NV (NYSE:MBLY)?
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 18% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Lone Pine Capital, managed by Stephen Mandel, holds the biggest position in Mobileye NV (NYSE:MBLY). Lone Pine Capital has a $290.8 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting in the 2 spot is JANA Partners, managed by Barry Rosenstein, which holds a $45.2 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Clifford Fox’s Columbus Circle Investors, Robert Polak’s Anchor Bolt Capital, and William Harnisch’s Peconic Partners LLC.
Since Mobileye NV (NYSE:MBLY) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds who were dropping their entire stakes last quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group dumped the largest position of the 700 funds monitored by Insider Monkey, valued at an estimated $77.1 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also dropped its stock, about $37.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 7 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Mobileye NV (NYSE:MBLY). These stocks are Ally Financial Inc (NYSE:ALLY), CMS Energy Corporation (NYSE:CMS), Coty Inc (NYSE:COTY), and Vipshop Holdings Ltd – ADR (NYSE:VIPS). All of these stocks’ market caps are closest to Mobileye NV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALLY | 57 | 3532229 | 1 |
| CMS | 18 | 60102 | -2 |
| COTY | 23 | 437847 | 3 |
| VIPS | 40 | 1433192 | -14 |
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.37 billion. That figure was $705 million in Mobileye NV’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 18 bullish hedge fund positions. Mobileye NV (NYSE:MBLY) is not the least popular stock in this group but hedge fund interest is still below average and falling. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Ally Financial might be a better candidate to consider a long position in.
