Is Marcus & Millichap Inc (NYSE:MMI) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Marcus & Millichap Inc (NYSE:MMI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of June. At the end of this article we will also compare MMI to other stocks including Brookline Bancorp, Inc. (NASDAQ:BRKL), OFG Bancorp (NYSE:OFG), and Winnebago Industries, Inc. (NYSE:WGO) to get a better sense of its popularity. Our calculations also showed that MMI isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the recent hedge fund action regarding Marcus & Millichap Inc (NYSE:MMI).
How have hedgies been trading Marcus & Millichap Inc (NYSE:MMI)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in MMI a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Royce & Associates, managed by Chuck Royce, holds the largest position in Marcus & Millichap Inc (NYSE:MMI). Royce & Associates has a $84.2 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is Eric Sprott of Sprott Asset Management, with a $3.1 million position; 0.7% of its 13F portfolio is allocated to the company. Other peers with similar optimism contain John Overdeck and David Siegel’s Two Sigma Advisors, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors and Cliff Asness’s AQR Capital Management.
Because Marcus & Millichap Inc (NYSE:MMI) has faced declining sentiment from the smart money, logic holds that there exists a select few hedgies that elected to cut their entire stakes heading into Q3. It’s worth mentioning that David Costen Haley’s HBK Investments dropped the biggest investment of all the hedgies watched by Insider Monkey, valued at about $1.2 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Marcus & Millichap Inc (NYSE:MMI). We will take a look at Brookline Bancorp, Inc. (NASDAQ:BRKL), OFG Bancorp (NYSE:OFG), Winnebago Industries, Inc. (NYSE:WGO), and Michaels Companies Inc (NASDAQ:MIK). This group of stocks’ market valuations are closest to MMI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRKL | 8 | 51964 | -1 |
| OFG | 18 | 84829 | -2 |
| WGO | 13 | 109505 | -2 |
| MIK | 26 | 56812 | -6 |
| Average | 16.25 | 75778 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $97 million in MMI’s case. Michaels Companies Inc (NASDAQ:MIK) is the most popular stock in this table. On the other hand Brookline Bancorp, Inc. (NASDAQ:BRKL) is the least popular one with only 8 bullish hedge fund positions. Marcus & Millichap Inc (NYSE:MMI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on MMI as the stock returned 15% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
