At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Hedge fund interest in Matthews International Corp (NASDAQ:MATW) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Helix Energy Solutions Group Inc. (NYSE:HLX), BMC Stock Holdings, Inc. (NASDAQ:BMCH), and Studio City International Holdings Limited (NYSE:MSC) to gather more data points.
In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, We look at the upper echelon of this club, around 750 funds. These investment experts orchestrate most of the hedge fund industry’s total capital, and by watching their finest stock picks, Insider Monkey has revealed several investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s take a gander at the fresh hedge fund action encompassing Matthews International Corp (NASDAQ:MATW).
Hedge fund activity in Matthews International Corp (NASDAQ:MATW)
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MATW over the last 15 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Rutabaga Capital Management, managed by Peter Schliemann, holds the largest position in Matthews International Corp (NASDAQ:MATW). Rutabaga Capital Management has a $11.1 million position in the stock, comprising 3.1% of its 13F portfolio. The second most bullish fund manager is GAMCO Investors, managed by Mario Gabelli, which holds a $10.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions consist of John W. Rogers’s Ariel Investments, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Matthews International Corp (NASDAQ:MATW) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their positions entirely heading into Q3. It’s worth mentioning that Brandon Haley’s Holocene Advisors said goodbye to the biggest position of the 700 funds tracked by Insider Monkey, worth about $0.7 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Matthews International Corp (NASDAQ:MATW) but similarly valued. These stocks are Helix Energy Solutions Group Inc. (NYSE:HLX), BMC Stock Holdings, Inc. (NASDAQ:BMCH), Studio City International Holdings Limited (NYSE:MSC), and TherapeuticsMD Inc (NASDAQ:TXMD). This group of stocks’ market caps match MATW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLX | 16 | 66120 | -2 |
| BMCH | 29 | 209953 | 5 |
| MSC | 4 | 186155 | -1 |
| TXMD | 9 | 78464 | -1 |
| Average | 14.5 | 135173 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $44 million in MATW’s case. BMC Stock Holdings, Inc. (NASDAQ:BMCH) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 4 bullish hedge fund positions. Matthews International Corp (NASDAQ:MATW) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MATW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MATW investors were disappointed as the stock returned -4.4% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
