It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. 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 Michaels Companies Inc (NASDAQ:MIK).
Michaels Companies Inc (NASDAQ:MIK) investors should be aware of a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that mik isn’t among the 30 most popular stocks among hedge funds.
In today’s marketplace there are dozens of signals investors put to use to grade stocks. A couple of the most useful signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the broader indices by a healthy margin (see the details here).
Let’s take a glance at the recent hedge fund action regarding Michaels Companies Inc (NASDAQ:MIK).
What does the smart money think about Michaels Companies Inc (NASDAQ:MIK)?
Heading into the fourth quarter of 2018, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in MIK at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Glenview Capital was the largest shareholder of Michaels Companies Inc (NASDAQ:MIK), with a stake worth $54.3 million reported as of the end of September. Trailing Glenview Capital was GoldenTree Asset Management, which amassed a stake valued at $26.2 million. D E Shaw, Tyvor Capital, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Michaels Companies Inc (NASDAQ:MIK) has experienced a decline in interest from hedge fund managers, logic holds that there is a sect of money managers that decided to sell off their full holdings last quarter. It’s worth mentioning that Jonathon Jacobson’s Highfields Capital Management dropped the biggest stake of the 700 funds tracked by Insider Monkey, worth close to $234.8 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund said goodbye to about $22.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to The Michaels Companies, Inc. (NASDAQ:MIK). We will take a look at Baozun Inc (NASDAQ:BZUN), Envestnet Inc (NYSE:ENV), Banco Macro SA (NYSE:BMA), and SeaWorld Entertainment Inc (NYSE:SEAS). This group of stocks’ market caps are similar to MIK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BZUN | 17 | 123960 | -3 |
| ENV | 13 | 70832 | 0 |
| BMA | 12 | 118446 | -4 |
| SEAS | 22 | 375366 | 6 |
| Average | 16 | 172151 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $212 million in MIK’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Banco Macro SA (NYSE:BMA) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Michaels Companies Inc (NASDAQ:MIK) 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.
Disclosure: None. This article was originally published at Insider Monkey.
