The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Six Flags Entertainment Corp (NYSE:SIX) from the perspective of those elite funds.
Is Six Flags Entertainment Corp (NYSE:SIX) a buy, sell, or hold? Prominent investors are in a bearish mood. The number of long hedge fund bets shrunk by 4 lately. SIX was in 28 hedge funds’ portfolios at the end of September. There were 32 hedge funds in our database with SIX holdings at the end of the previous quarter. 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 Servicemaster Global Holdings Inc (NYSE:SERV), Copart, Inc. (NASDAQ:CPRT), and Assurant, Inc. (NYSE:AIZ) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a gander at the latest action regarding Six Flags Entertainment Corp (NYSE:SIX).
What have hedge funds been doing with Six Flags Entertainment Corp (NYSE:SIX)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, H Partners Management, managed by Rehan Jaffer, holds the number one position in Six Flags Entertainment Corp (NYSE:SIX). H Partners Management has a $727 million position in the stock, comprising 59% of its 13F portfolio. The second largest stake is held by Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $67.6 million position; 1.3% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Amy Minella’s Cardinal Capital, Principal Global Investors’s Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.
Since Six Flags Entertainment Corp (NYSE:SIX) has witnessed falling interest from the smart money, it’s safe to say that there exists a select few funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at an estimated $28.7 million in stock. Shashin Shah’s fund, Think Investments, also dumped its stock, about $25.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to Six Flags Entertainment Corp (NYSE:SIX). We will take a look at Servicemaster Global Holdings Inc (NYSE:SERV), Copart, Inc. (NASDAQ:CPRT), Assurant, Inc. (NYSE:AIZ), and JetBlue Airways Corporation (NASDAQ:JBLU). This group of stocks’ market valuations match SIX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SERV | 36 | 1305900 | 4 |
| CPRT | 34 | 349162 | 8 |
| AIZ | 16 | 219776 | -8 |
| JBLU | 32 | 486895 | -6 |
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $1.04 billion in SIX’ case. Servicemaster Global Holdings Inc (NYSE:SERV) is the most popular stock in this table. On the other hand Assurant, Inc. (NYSE:AIZ) is the least popular one with only 16 bullish hedge fund positions. Six Flags Entertainment Corp (NYSE:SIX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SERV might be a better candidate to consider a long position.
