Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Manchester United PLC (NYSE:MANU) a buy, sell, or hold? Money managers are actually actually taking a pessimistic view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings were cut by 2 lately. There were 7 hedge funds in our database with MANU holdings at the end of the 2016 third quarter. At the end of this article we will also compare MANU to other stocks including United States Steel Corporation (NYSE:X), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Columbia Property Trust Inc (NYSE:CXP) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s take a gander at the key action encompassing Manchester United PLC (NYSE:MANU).
How have hedgies been trading Manchester United PLC (NYSE:MANU)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 22% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in MANU heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Alex Snow’s Lansdowne Partners has the largest position in Manchester United PLC (NYSE:MANU), worth close to $83.4 million, amounting to 0.7% of its total 13F portfolio. The second most bullish fund manager is Lomas Capital Management, led by Daniel Lascano, holding a $14 million position; 3.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish consist of Renaissance Technologies, one of the largest hedge funds in the world, D. E. Shaw’s D E Shaw and Charles Clough’s Clough Capital Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Manchester United PLC (NYSE:MANU) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds who were dropping their positions entirely heading into Q4. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management dumped the largest position of all the investors followed by Insider Monkey, worth an estimated $0.2 million in call options. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.2 million worth of shares.
Let’s also examine hedge fund activity in other stocks similar to Manchester United PLC (NYSE:MANU). We will take a look at United States Steel Corporation (NYSE:X), Blackstone Mortgage Trust Inc (NYSE:BXMT), Columbia Property Trust Inc (NYSE:CXP), and Terex Corporation (NYSE:TEX). All of these stocks’ market caps match MANU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| X | 35 | 787667 | 9 |
| BXMT | 17 | 273906 | -1 |
| CXP | 11 | 84467 | -1 |
| TEX | 25 | 357338 | -6 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $109 million in MANU’s case. United States Steel Corporation (NYSE:X) is the most popular stock in this table. On the other hand Columbia Property Trust Inc (NYSE:CXP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Manchester United PLC (NYSE:MANU) is even less popular than CXP. 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.
