Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about MSCI Inc (NYSE:MSCI).
Is MSCI Inc (NYSE:MSCI) a good stock to buy now? Money managers were becoming hopeful. The number of long hedge fund bets went up by 6 recently. MSCI Inc (NYSE:MSCI) was in 43 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that MSCI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 37 hedge funds in our database with MSCI holdings at the end of June.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s view the new hedge fund action regarding MSCI Inc (NYSE:MSCI).
Do Hedge Funds Think MSCI Is A Good Stock To Buy Now?
At Q3’s end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 47 hedge funds with a bullish position in MSCI a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Echo Street Capital Management held the most valuable stake in MSCI Inc (NYSE:MSCI), which was worth $158.9 million at the end of the third quarter. On the second spot was Fundsmith LLP which amassed $128.1 million worth of shares. Fisher Asset Management, Atalan Capital, and Arrowstreet Capital 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 Atalan Capital allocated the biggest weight to MSCI Inc (NYSE:MSCI), around 7.02% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, designating 3.73 percent of its 13F equity portfolio to MSCI.
As one would reasonably expect, some big names have jumped into MSCI Inc (NYSE:MSCI) headfirst. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, created the most valuable position in MSCI Inc (NYSE:MSCI). Senator Investment Group had $24.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $4.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Jinghua Yan’s TwinBeech Capital, and Steve Cohen’s Point72 Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MSCI Inc (NYSE:MSCI) but similarly valued. These stocks are Canadian Imperial Bank of Commerce (NYSE:CM), Humana Inc (NYSE:HUM), Marvell Technology Group Ltd. (NASDAQ:MRVL), Dollar General Corp. (NYSE:DG), Banco Santander (Brasil) SA (NYSE:BSBR), Johnson Controls International plc (NYSE:JCI), and Keurig Dr Pepper Inc. (NASDAQ:KDP). All of these stocks’ market caps are closest to MSCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CM | 13 | 289714 | -2 |
| HUM | 60 | 2900740 | 1 |
| MRVL | 45 | 1152936 | -6 |
| DG | 46 | 1905639 | 1 |
| BSBR | 8 | 10442 | 1 |
| JCI | 45 | 1031579 | 6 |
| KDP | 33 | 1269519 | 5 |
| Average | 35.7 | 1222938 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.7 hedge funds with bullish positions and the average amount invested in these stocks was $1223 million. That figure was $998 million in MSCI’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. MSCI Inc (NYSE:MSCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MSCI is 71.1. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately MSCI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MSCI were disappointed as the stock returned 3.6% since the end of September (through 11/30) 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.
Follow Msci Inc. (NYSE:MSCI)
Follow Msci Inc. (NYSE:MSCI)
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Disclosure: None. This article was originally published at Insider Monkey.
