We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Acushnet Holdings Corp. (NYSE:GOLF) based on those filings.
Acushnet Holdings Corp. (NYSE:GOLF) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that GOLF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the recent hedge fund action surrounding Acushnet Holdings Corp. (NYSE:GOLF).
What have hedge funds been doing with Acushnet Holdings Corp. (NYSE:GOLF)?
Heading into the first quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in GOLF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Acushnet Holdings Corp. (NYSE:GOLF) was held by Marshall Wace LLP, which reported holding $5.3 million worth of stock at the end of September. It was followed by D E Shaw with a $4 million position. Other investors bullish on the company included Winton Capital Management, AQR Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Acushnet Holdings Corp. (NYSE:GOLF), around 0.5% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to GOLF.
As aggregate interest increased, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Acushnet Holdings Corp. (NYSE:GOLF). Balyasny Asset Management had $0.9 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Louis Navellier’s Navellier & Associates, Joel Greenblatt’s Gotham Asset Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Acushnet Holdings Corp. (NYSE:GOLF) but similarly valued. We will take a look at United Community Banks Inc (NASDAQ:UCBI), LexinFintech Holdings Ltd. (NASDAQ:LX), Xenia Hotels & Resorts Inc (NYSE:XHR), and Afya Limited (NASDAQ:AFYA). This group of stocks’ market caps are similar to GOLF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UCBI | 16 | 56723 | 3 |
| LX | 13 | 117071 | -2 |
| XHR | 11 | 45672 | 2 |
| AFYA | 9 | 55035 | 2 |
| Average | 12.25 | 68625 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $22 million in GOLF’s case. United Community Banks Inc (NASDAQ:UCBI) is the most popular stock in this table. On the other hand Afya Limited (NASDAQ:AFYA) is the least popular one with only 9 bullish hedge fund positions. Acushnet Holdings Corp. (NYSE:GOLF) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately GOLF wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GOLF were disappointed as the stock returned -25.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
