Do Hedge Funds Love The Marcus Corporation (MCS)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in The Marcus Corporation (NYSE:MCS) .

MCS shareholders have witnessed an increase in hedge fund interest of late. There were 8 hedge funds in our database with MCS positions at the end of the previous quarter, versus 9 at the end of Q3. At the end of this article we will also compare MCS to other stocks including National Bank Holdings Corp (NYSE:NBHC), Customers Bancorp Inc (NASDAQ:CUBI), and PROS Holdings, Inc. (NYSE:PRO) 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.

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Now, we’re going to analyze the key action encompassing The Marcus Corporation (NYSE:MCS).

Hedge fund activity in The Marcus Corporation (NYSE:MCS)

Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in MCS over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the biggest position in The Marcus Corporation (NYSE:MCS). GAMCO Investors has a $29.3 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, one of the biggest hedge funds in the world, holding a $4.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, key money managers were leading the bulls’ herd. PEAK6 Capital Management, led by Matthew Hulsizer, assembled the most outsized position in The Marcus Corporation (NYSE:MCS).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Marcus Corporation (NYSE:MCS) but similarly valued. These stocks are National Bank Holdings Corp (NYSE:NBHC), Customers Bancorp Inc (NASDAQ:CUBI), PROS Holdings, Inc. (NYSE:PRO), and Washington Trust Bancorp (NASDAQ:WASH). This group of stocks’ market values are similar to MCS’s market value.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $41 million in MCS’s case. National Bank Holdings Corp (NYSE:NBHC) is the most popular stock in this table. On the other hand PROS Holdings, Inc. (NYSE:PRO) is the least popular one with only 5 bullish hedge fund positions. The Marcus Corporation (NYSE:MCS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NBHC might be a better candidate to consider taking a long position in.