We started seeing tectonic shifts in the market during the third quarter. Small-cap stocks underperformed the large-cap stocks by more than 10 percentage points between the end of June 2015 and the end of June 2016. A mean reversion in trends bumped small-cap stocks’ return to almost 9% in Q3, outperforming their large-cap peers by 5 percentage points. The momentum in small-cap space hasn’t subsided during this quarter either. Small-cap stocks beat large-cap stocks by another 5 percentage points during the first 7 weeks of this quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were boosting their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Masco Corp (NYSE:MAS).
Masco Corp (NYSE:MAS) has seen an increase in hedge fund sentiment in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Whole Foods Market, Inc. (NASDAQ:WFM), Ball Corporation (NYSE:BLL), and Annaly Capital Management, Inc. (NYSE:NLY) to gather more data points.
Follow Masco Corp (NYSE:MAS)
Follow Masco Corp (NYSE:MAS)
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With all of this in mind, let’s review the latest action encompassing Masco Corp (NYSE:MAS).
What does the smart money think about Masco Corp (NYSE:MAS)?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the second quarter of 2016. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Masco Corp (NYSE:MAS). AQR Capital Management has a $199 million position in the stock, comprising 0.3% of its 13F portfolio. On AQR Capital Management’s heels is Columbus Circle Investors, led by Principal Global Investors, holding a $153.4 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain David Cohen and Harold Levy’s Iridian Asset Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the largest position in Masco Corp (NYSE:MAS). Adage Capital Management had $45.6 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also initiated a $27.4 million position during the quarter. The other funds with new positions in the stock are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Ken Griffin’s Citadel Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks similar to Masco Corp (NYSE:MAS). We will take a look at Whole Foods Market, Inc. (NASDAQ:WFM), Ball Corporation (NYSE:BLL), Annaly Capital Management, Inc. (NYSE:NLY), and Discovery Communications Inc. (NASDAQ:DISCA). This group of stocks’ market values match MAS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WFM | 28 | 768340 | 2 |
| BLL | 35 | 1617854 | -7 |
| NLY | 13 | 120034 | -4 |
| DISCA | 27 | 293055 | -3 |
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $700 million. That figure was $1212 million in MAS’ case. Ball Corporation (NYSE:BLL) is the most popular stock in this table. On the other hand Annaly Capital Management, Inc. (NYSE:NLY) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Masco Corp (NYSE:MAS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
