It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 13.1% in the first 2.5 months of this year (including dividend payments). Conversely, hedge funds’ top 15 large-cap stock picks generated a return of 19.7% during the same 2.5-month period, with 93% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Multi-Color Corporation (NASDAQ:LABL).
Is Multi-Color Corporation (NASDAQ:LABL) ready to rally soon? The smart money is getting more optimistic. The number of long hedge fund bets improved by 5 in recent months. Our calculations also showed that LABL isn’t among the 30 most popular stocks among hedge funds. LABL was in 10 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 5 hedge funds in our database with LABL holdings at the end of the previous quarter.
To most shareholders, hedge funds are viewed as worthless, old financial vehicles of years past. While there are greater than 8000 funds with their doors open today, We look at the elite of this club, approximately 750 funds. These hedge fund managers handle bulk of all hedge funds’ total capital, and by keeping track of their first-class equity investments, Insider Monkey has unsheathed various investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s take a peek at the fresh hedge fund action regarding Multi-Color Corporation (NASDAQ:LABL).
What does the smart money think about Multi-Color Corporation (NASDAQ:LABL)?
Heading into the first quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in LABL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Multi-Color Corporation (NASDAQ:LABL), with a stake worth $5 million reported as of the end of December. Trailing Citadel Investment Group was Millennium Management, which amassed a stake valued at $3.7 million. Sagard Capital Partners Management Corp, Marshall Wace LLP, and Blue Mountain Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Multi-Color Corporation (NASDAQ:LABL). Citadel Investment Group had $5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $3.7 million position during the quarter. The following funds were also among the new LABL investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Jim Simons’s Renaissance Technologies, and Roger Ibbotson’s Zebra Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Multi-Color Corporation (NASDAQ:LABL). These stocks are MTS Systems Corporation (NASDAQ:MTSC), Nabors Industries Ltd. (NYSE:NBR), ImmunoGen, Inc. (NASDAQ:IMGN), and OraSure Technologies, Inc. (NASDAQ:OSUR). All of these stocks’ market caps are similar to LABL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTSC | 12 | 104204 | 0 |
| NBR | 32 | 120080 | -7 |
| IMGN | 16 | 140927 | -2 |
| OSUR | 21 | 108703 | 0 |
| Average | 20.25 | 118479 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $18 million in LABL’s case. Nabors Industries Ltd. (NYSE:NBR) is the most popular stock in this table. On the other hand MTS Systems Corporation (NASDAQ:MTSC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Multi-Color Corporation (NASDAQ:LABL) is even less popular than MTSC. Hedge funds clearly dropped the ball on LABL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on LABL as the stock returned 42.6% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
