Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards MSCI Inc (NYSE:MSCI) at the end of the third quarter and determine whether the smart money was really smart about this stock.
MSCI Inc (NYSE:MSCI) was in 43 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. MSCI has seen an increase in support from the world’s most elite money managers lately. There were 37 hedge funds in our database with MSCI positions at the end of the second quarter. Our calculations also showed that MSCI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a gander at the recent hedge fund action regarding MSCI Inc (NYSE:MSCI).
Do Hedge Funds Think MSCI Is A Good Stock To Buy Now?
At third quarter’s end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSCI over the last 25 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Echo Street Capital Management was the largest shareholder of MSCI Inc (NYSE:MSCI), with a stake worth $158.9 million reported as of the end of September. Trailing Echo Street Capital Management was Fundsmith LLP, which amassed a stake valued at $128.1 million. Fisher Asset Management, Atalan Capital, and Arrowstreet Capital were 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 Atalan Capital allocated the biggest weight to MSCI Inc (NYSE:MSCI), around 7.02% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, dishing out 3.73 percent of its 13F equity portfolio to MSCI.
Now, key hedge funds have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, created the most outsized position in MSCI Inc (NYSE:MSCI). Senator Investment Group had $24.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $4.8 million investment in the stock during the quarter. The following funds were also among the new MSCI investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Jinghua Yan’s TwinBeech Capital, and Steve Cohen’s Point72 Asset Management.
Let’s also examine hedge fund activity in other stocks similar to MSCI Inc (NYSE:MSCI). These stocks are Canadian Imperial Bank of Commerce (NYSE:CM), Humana Inc (NYSE:HUM), Marvell Technology Group Ltd. (NASDAQ:MRVL), Dollar General Corp. (NYSE:DG), Banco Santander (Brasil) SA (NYSE:BSBR), Johnson Controls International plc (NYSE:JCI), and Keurig Dr Pepper Inc. (NASDAQ:KDP). All of these stocks’ market caps are closest to MSCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CM | 13 | 289714 | -2 |
| HUM | 60 | 2900740 | 1 |
| MRVL | 45 | 1152936 | -6 |
| DG | 46 | 1905639 | 1 |
| BSBR | 8 | 10442 | 1 |
| JCI | 45 | 1031579 | 6 |
| KDP | 33 | 1269519 | 5 |
| Average | 35.7 | 1222938 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.7 hedge funds with bullish positions and the average amount invested in these stocks was $1223 million. That figure was $998 million in MSCI’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. MSCI Inc (NYSE:MSCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MSCI is 71.1. 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 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, MSCI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MSCI were disappointed as the stock returned -11.7% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Msci Inc. (NYSE:MSCI)
Follow Msci Inc. (NYSE:MSCI)
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Disclosure: None. This article was originally published at Insider Monkey.
