Hedge Fund Sentiment Is Stagnant On Mattel, Inc. (MAT)

Is Mattel, Inc. (NASDAQ:MAT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Hedge fund interest in Mattel, Inc. (NASDAQ:MAT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MAT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare MAT to other stocks including First Financial Bankshares Inc (NASDAQ:FFIN), Cabot Oil & Gas Corporation (NYSE:COG), and Envista Holdings Corporation (NYSE:NVST) to get a better sense of its popularity.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mason Hawkins of Southeastern Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a glance at the fresh hedge fund action encompassing Mattel, Inc. (NASDAQ:MAT).

Do Hedge Funds Think MAT Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in MAT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Southeastern Asset Management held the most valuable stake in Mattel, Inc. (NASDAQ:MAT), which was worth $381.7 million at the end of the second quarter. On the second spot was Ariel Investments which amassed $314 million worth of shares. Citadel Investment Group, Arrowstreet Capital, and Schonfeld Strategic Advisors 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 Southeastern Asset Management allocated the biggest weight to Mattel, Inc. (NASDAQ:MAT), around 7.67% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, designating 2.95 percent of its 13F equity portfolio to MAT.

Since Mattel, Inc. (NASDAQ:MAT) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few funds that slashed their entire stakes by the end of the second quarter. It’s worth mentioning that Thyra Zerhusen’s Fairpointe Capital sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $4.2 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also sold off its stock, about $1.1 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mattel, Inc. (NASDAQ:MAT) but similarly valued. These stocks are First Financial Bankshares Inc (NASDAQ:FFIN), Cabot Oil & Gas Corporation (NYSE:COG), Envista Holdings Corporation (NYSE:NVST), Pacific Biosciences of California, Inc. (NASDAQ:PACB), BanColombia S.A. (NYSE:CIB), BlackBerry Limited (NYSE:BB), and Leggett & Platt, Inc. (NYSE:LEG). This group of stocks’ market values are closest to MAT’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $580 million. That figure was $929 million in MAT’s case. Envista Holdings Corporation (NYSE:NVST) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 3 bullish hedge fund positions. Mattel, Inc. (NASDAQ:MAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAT is 56.7. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately MAT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MAT were disappointed as the stock returned 1.7% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.