Hedge Funds Are Buying Macy’s, Inc. (M)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Macy’s, Inc. (NYSE:M) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Macy’s, Inc. (NYSE:M) has seen an increase in support from the world’s most elite money managers recently. 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 BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Hormel Foods Corporation (NYSE:HRL), and Sigma-Aldrich Corporation (NASDAQ:SIAL) to gather more data points.

In the eyes of most investors, hedge funds are perceived as worthless, old financial vehicles of yesteryear. While there are more than an 8000 funds in operation at present, Our experts choose to focus on the crème de la crème of this group, around 700 funds. These hedge fund managers have their hands on the lion’s share of the hedge fund industry’s total capital, and by observing their unrivaled picks, Insider Monkey has deciphered numerous investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s check out the key action encompassing Macy’s, Inc. (NYSE:M).

What have hedge funds been doing with Macy’s, Inc. (NYSE:M)?

At the end of the third quarter, a total of 67 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the number one position in Macy’s, Inc. (NYSE:M), worth close to $167.4 million, accounting for 3.7% of its total 13F portfolio. The second most bullish fund manager is HG Vora Capital Management, led by Parag Vora, holding a $124.5 million position; 14.9% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions contain Cliff Asness’ AQR Capital Management, Mark T. Gallogly’s Centerbridge Partners and Thomas Ellis and Todd Hammer’s North Run Capital.

As one would reasonably expect, specific money managers were leading the bulls’ herd. York Capital Management, managed by James Dinan, initiated the most valuable call position in Macy’s, Inc. (NYSE:M). York Capital Management had $46.9 million invested in the company at the end of the quarter. Craig C. Albert’s Sheffield Asset Management also made a $32.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’ Renaissance Technologies, Paul Singer’s Elliott Management, and Mark Kingdon’s Kingdon Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Macy’s, Inc. (NYSE:M) but similarly valued. These stocks are BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Hormel Foods Corporation (NYSE:HRL), Sigma-Aldrich Corporation (NASDAQ:SIAL), and Smith & Nephew plc (ADR) (NYSE:SNN). This group of stocks’ market valuations resemble Macy’s market valuation.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $916 million. That figure was $1.59 billion in Macy’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table with a total of 50 funds reporting long stakes, while Smith & Nephew plc (ADR) (NYSE:SNN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks, Macy’s, Inc. (NYSE:M) 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.