At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not IMAX Corporation (NYSE:IMAX) makes for a good investment right now.
IMAX Corporation (NYSE:IMAX) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. IMAX shareholders have witnessed an increase in enthusiasm from smart money recently. There were 22 hedge funds in our database with IMAX positions at the end of the first quarter. Our calculations also showed that IMAX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the key hedge fund action surrounding IMAX Corporation (NYSE:IMAX).
Do Hedge Funds Think IMAX Is A Good Stock To Buy Now?
At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in IMAX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Nantahala Capital Management was the largest shareholder of IMAX Corporation (NYSE:IMAX), with a stake worth $47.1 million reported as of the end of June. Trailing Nantahala Capital Management was Renaissance Technologies, which amassed a stake valued at $41.5 million. Private Capital Management, Two Sigma Advisors, and Royce & Associates 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 Private Capital Management allocated the biggest weight to IMAX Corporation (NYSE:IMAX), around 3.31% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 1.34 percent of its 13F equity portfolio to IMAX.
As aggregate interest increased, key money managers have jumped into IMAX Corporation (NYSE:IMAX) headfirst. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, established the biggest call position in IMAX Corporation (NYSE:IMAX). Nantahala Capital Management had $12.9 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital also made a $3.8 million investment in the stock during the quarter. The other funds with brand new IMAX positions are Israel Englander’s Millennium Management, Donald Sussman’s Paloma Partners, and Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as IMAX Corporation (NYSE:IMAX) but similarly valued. We will take a look at Golden Entertainment Inc (NASDAQ:GDEN), Studio City International Holdings Limited (NYSE:MSC), New Mountain Finance Corp. (NASDAQ:NMFC), Cambium Networks Corporation (NASDAQ:CMBM), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Schweitzer-Mauduit International, Inc. (NYSE:SWM), and TriCo Bancshares (NASDAQ:TCBK). This group of stocks’ market values match IMAX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GDEN | 21 | 216894 | 3 |
| MSC | 3 | 198107 | 0 |
| NMFC | 10 | 24302 | 1 |
| CMBM | 23 | 125098 | 13 |
| GGAL | 7 | 10087 | 0 |
| SWM | 7 | 10974 | 0 |
| TCBK | 10 | 37014 | 4 |
| Average | 11.6 | 88925 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $203 million in IMAX’s case. Cambium Networks Corporation (NASDAQ:CMBM) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks IMAX Corporation (NYSE:IMAX) is more popular among hedge funds. Our overall hedge fund sentiment score for IMAX is 87. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately IMAX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IMAX were disappointed as the stock returned 1.6% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
