We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Meta Financial Group Inc. (NASDAQ:CASH) and determine whether hedge funds skillfully traded this stock.
Meta Financial Group Inc. (NASDAQ:CASH) shareholders have witnessed an increase in support from the world’s most elite money managers of late. CASH was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 12 hedge funds in our database with CASH positions at the end of the previous quarter. Our calculations also showed that CASH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 15 largest gold producing countries to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the fresh hedge fund action encompassing Meta Financial Group Inc. (NASDAQ:CASH).
How are hedge funds trading Meta Financial Group Inc. (NASDAQ:CASH)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CASH over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the most valuable position in Meta Financial Group Inc. (NASDAQ:CASH), worth close to $39.1 million, accounting for 1.5% of its total 13F portfolio. The second most bullish fund manager is Richard Driehaus of Driehaus Capital, with a $9.3 million position; 0.3% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions contain Parsa Kiai’s Steamboat Capital Partners, John Osterweis’s Osterweis Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Steamboat Capital Partners allocated the biggest weight to Meta Financial Group Inc. (NASDAQ:CASH), around 1.62% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 1.46 percent of its 13F equity portfolio to CASH.
As one would reasonably expect, specific money managers have jumped into Meta Financial Group Inc. (NASDAQ:CASH) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the biggest position in Meta Financial Group Inc. (NASDAQ:CASH). Citadel Investment Group had $1.3 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Coe’s Intrinsic Edge Capital, Renaissance Technologies, and Greg Eisner’s Engineers Gate Manager.
Let’s go over hedge fund activity in other stocks similar to Meta Financial Group Inc. (NASDAQ:CASH). These stocks are Sandy Spring Bancorp Inc. (NASDAQ:SASR), Anterix Inc. (NASDAQ:ATEX), Natus Medical Inc (NASDAQ:NTUS), and FARO Technologies, Inc. (NASDAQ:FARO). All of these stocks’ market caps are closest to CASH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SASR | 12 | 36542 | -3 |
| ATEX | 11 | 415373 | -1 |
| NTUS | 23 | 72047 | -1 |
| FARO | 12 | 112398 | 0 |
| Average | 14.5 | 159090 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $71 million in CASH’s case. Natus Medical Inc (NASDAQ:NTUS) is the most popular stock in this table. On the other hand Anterix Inc. (NASDAQ:ATEX) is the least popular one with only 11 bullish hedge fund positions. Meta Financial Group Inc. (NASDAQ:CASH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately CASH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CASH investors were disappointed as the stock returned -19.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Pathward Financial Inc. (NASDAQ:CASH)
Follow Pathward Financial Inc. (NASDAQ:CASH)
Disclosure: None. This article was originally published at Insider Monkey.
