We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Matson, Inc. (NYSE:MATX).
Matson, Inc. (NYSE:MATX) has seen an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that MATX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the key hedge fund action regarding Matson, Inc. (NYSE:MATX).
How have hedgies been trading Matson, Inc. (NYSE:MATX)?
Heading into the fourth quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MATX over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Matson, Inc. (NYSE:MATX) was held by Marshall Wace, which reported holding $1.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $1.3 million position. Other investors bullish on the company included Millennium Management, Paloma Partners, and AQR Capital Management. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Matson, Inc. (NYSE:MATX), around 0.25% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to MATX.
Consequently, some big names have been driving this bullishness. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Matson, Inc. (NYSE:MATX). Marshall Wace had $1.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new MATX positions are Donald Sussman’s Paloma Partners, Hoon Kim’s Quantinno Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks similar to Matson, Inc. (NYSE:MATX). We will take a look at Revolve Group, Inc. (NYSE:RVLV), Dycom Industries, Inc. (NYSE:DY), Corcept Therapeutics Incorporated (NASDAQ:CORT), and Newmark Group, Inc. (NASDAQ:NMRK). All of these stocks’ market caps are closest to MATX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RVLV | 14 | 49758 | -1 |
| DY | 17 | 56809 | 0 |
| CORT | 18 | 135196 | 1 |
| NMRK | 19 | 111199 | 3 |
| Average | 17 | 88241 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $5 million in MATX’s case. Newmark Group, Inc. (NASDAQ:NMRK) is the most popular stock in this table. On the other hand Revolve Group, Inc. (NYSE:RVLV) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Matson, Inc. (NYSE:MATX) is even less popular than RVLV. Hedge funds dodged a bullet by taking a bearish stance towards MATX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MATX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MATX investors were disappointed as the stock returned 1.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
