Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 30 stock picks outperformed the S&P 500 Index by 4 percentage points through the middle of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is The Marcus Corporation (NYSE:MCS) an attractive investment now? The best stock pickers are becoming hopeful. The number of long hedge fund bets inched up by 4 lately. Our calculations also showed that mcs isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action surrounding The Marcus Corporation (NYSE:MCS).
What have hedge funds been doing with The Marcus Corporation (NYSE:MCS)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MCS over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in The Marcus Corporation (NYSE:MCS), which was worth $41.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $16.9 million worth of shares. Moreover, Millennium Management, GLG Partners, and Arrowstreet Capital were also bullish on The Marcus Corporation (NYSE:MCS), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, initiated the biggest position in The Marcus Corporation (NYSE:MCS). GLG Partners had $5.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new MCS investors: Joel Greenblatt’s Gotham Asset Management, Jeffrey Talpins’s Element Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks similar to The Marcus Corporation (NYSE:MCS). We will take a look at Omeros Corporation (NASDAQ:OMER), Radware Ltd. (NASDAQ:RDWR), Revlon Inc (NYSE:REV), and Schweitzer-Mauduit International, Inc. (NYSE:SWM). This group of stocks’ market values resemble MCS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMER | 8 | 74551 | 1 |
| RDWR | 16 | 320904 | 1 |
| REV | 26 | 196503 | 6 |
| SWM | 14 | 40845 | -2 |
| Average | 16 | 158201 | 1.5 |
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 $158 million. That figure was $81 million in MCS’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Omeros Corporation (NASDAQ:OMER) is the least popular one with only 8 bullish hedge fund positions. The Marcus Corporation (NYSE:MCS) 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 REV might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
