Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Malibu Boats Inc (NASDAQ:MBUU).
Malibu Boats Inc (NASDAQ:MBUU) has seen an increase in enthusiasm from smart money of late. Our calculations also showed that MBUU 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
John Overdeck of Two Sigma Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the fresh hedge fund action regarding Malibu Boats Inc (NASDAQ:MBUU).
How are hedge funds trading Malibu Boats Inc (NASDAQ:MBUU)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the second quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in MBUU a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Malibu Boats Inc (NASDAQ:MBUU) was held by Renaissance Technologies, which reported holding $37.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $10.2 million position. Other investors bullish on the company included Shellback Capital, Two Sigma Advisors, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to Malibu Boats Inc (NASDAQ:MBUU), around 0.89% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 0.61 percent of its 13F equity portfolio to MBUU.
Now, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Malibu Boats Inc (NASDAQ:MBUU). Arrowstreet Capital had $4.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are Mark Broach’s Manatuck Hill Partners, David Harding’s Winton Capital Management, and Chuck Royce’s Royce & Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Malibu Boats Inc (NASDAQ:MBUU) but similarly valued. These stocks are Niu Technologies (NASDAQ:NIU), Myers Industries, Inc. (NYSE:MYE), Rubius Therapeutics, Inc. (NASDAQ:RUBY), and Pzena Investment Management Inc (NYSE:PZN). This group of stocks’ market caps resemble MBUU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NIU | 5 | 36234 | -1 |
| MYE | 12 | 98711 | -2 |
| RUBY | 5 | 11603 | 0 |
| PZN | 7 | 20337 | 1 |
| Average | 7.25 | 41721 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $81 million in MBUU’s case. Myers Industries, Inc. (NYSE:MYE) is the most popular stock in this table. On the other hand Niu Technologies (NASDAQ:NIU) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Malibu Boats Inc (NASDAQ:MBUU) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MBUU as the stock returned 28.9% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
