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. Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Masonite International Corp (NYSE:DOOR).
Masonite International Corp (NYSE:DOOR) was in 21 hedge funds’ portfolios at the end of the fourth quarter of 2019. DOOR has experienced an increase in hedge fund interest in recent months. There were 18 hedge funds in our database with DOOR positions at the end of the previous quarter. Our calculations also showed that DOOR 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).
To the average investor there are several metrics stock traders use to appraise their stock investments. A duo of the most useful metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform their index-focused peers by a solid margin (see the details here).
Richard S. Pzena of Pzena Investment Management
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. 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 gander at the latest hedge fund action regarding Masonite International Corp (NYSE:DOOR).
Hedge fund activity in Masonite International Corp (NYSE:DOOR)
At Q4’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in DOOR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kevin Oram and Peter Uddo’s Praesidium Investment Management Company has the most valuable position in Masonite International Corp (NYSE:DOOR), worth close to $149.6 million, amounting to 9.3% of its total 13F portfolio. The second most bullish fund manager is Pzena Investment Management, managed by Richard S. Pzena, which holds a $78.4 million position; 0.4% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Will Cook’s Sunriver Management, Renaissance Technologies and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to Masonite International Corp (NYSE:DOOR), around 9.25% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, dishing out 7.3 percent of its 13F equity portfolio to DOOR.
As industrywide interest jumped, key money managers have jumped into Masonite International Corp (NYSE:DOOR) headfirst. Intrinsic Edge Capital, managed by Mark Coe, established the most outsized position in Masonite International Corp (NYSE:DOOR). Intrinsic Edge Capital had $13.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $11.6 million position during the quarter. The other funds with new positions in the stock are Ken Grossman and Glen Schneider’s SG Capital Management, Ed Bosek’s BeaconLight Capital, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Masonite International Corp (NYSE:DOOR). These stocks are Skyline Champion Corporation (NYSE:SKY), Zymeworks Inc. (NYSE:ZYME), Inspire Medical Systems, Inc. (NYSE:INSP), and Winnebago Industries, Inc. (NYSE:WGO). All of these stocks’ market caps are similar to DOOR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKY | 26 | 286701 | -1 |
| ZYME | 24 | 667083 | 8 |
| INSP | 21 | 325421 | 2 |
| WGO | 23 | 230640 | 8 |
| Average | 23.5 | 377461 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $377 million. That figure was $422 million in DOOR’s case. Skyline Champion Corporation (NYSE:SKY) is the most popular stock in this table. On the other hand Inspire Medical Systems, Inc. (NYSE:INSP) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Masonite International Corp (NYSE:DOOR) is even less popular than INSP. Hedge funds dodged a bullet by taking a bearish stance towards DOOR. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately DOOR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); DOOR investors were disappointed as the stock returned -42.1% 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 most of these stocks already outperformed the market so far in 2020.
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.
