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 Studio City International Holdings Limited (NYSE:MSC).
Studio City International Holdings Limited (NYSE:MSC) investors should be aware of a decrease in hedge fund sentiment lately. MSC was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 4 hedge funds in our database with MSC positions at the end of the previous quarter. Our calculations also showed that MSC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. With all of this in mind let’s take a glance at the latest hedge fund action encompassing Studio City International Holdings Limited (NYSE:MSC).
How have hedgies been trading Studio City International Holdings Limited (NYSE:MSC)?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MSC over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Silver Point Capital was the largest shareholder of Studio City International Holdings Limited (NYSE:MSC), with a stake worth $218.1 million reported as of the end of September. Trailing Silver Point Capital was Redwood Capital Management, which amassed a stake valued at $24.6 million. Millennium Management was 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 Silver Point Capital allocated the biggest weight to Studio City International Holdings Limited (NYSE:MSC), around 25.55% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, earmarking 4.5 percent of its 13F equity portfolio to MSC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Serengeti Asset Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MSC as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks similar to Studio City International Holdings Limited (NYSE:MSC). We will take a look at Apache Corporation (NYSE:APA), Bandwidth Inc. (NASDAQ:BAND), Cleveland-Cliffs Inc (NYSE:CLF), and ServisFirst Bancshares, Inc. (NASDAQ:SFBS). This group of stocks’ market caps match MSC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APA | 35 | 142310 | 1 |
| BAND | 33 | 195011 | 15 |
| CLF | 23 | 77492 | -8 |
| SFBS | 10 | 10012 | 1 |
| Average | 25.25 | 106206 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $244 million in MSC’s case. Apache Corporation (NYSE:APA) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Studio City International Holdings Limited (NYSE:MSC) is even less popular than SFBS. Hedge funds dodged a bullet by taking a bearish stance towards MSC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately MSC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MSC investors were disappointed as the stock returned -25% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
