As we already know from media reports and hedge fund investor letters, many hedge funds lost money in October, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about IMAX Corporation (NYSE:IMAX) in this article.
IMAX Corporation (NYSE:IMAX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the third quarter of 2018. At the end of this article we will also compare IMAX to other stocks including Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Matthews International Corp (NASDAQ:MATW), and MicroStrategy Incorporated (NASDAQ:MSTR) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the latest hedge fund action encompassing IMAX Corporation (NYSE:IMAX).
How are hedge funds trading IMAX Corporation (NYSE:IMAX)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in IMAX at the beginning of this year. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of IMAX Corporation (NYSE:IMAX), with a stake worth $9.1 million reported as of the end of September. Trailing Two Sigma Advisors was GLG Partners, which amassed a stake valued at $6.6 million. D E Shaw, Citadel Investment Group, and IBIS Capital Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that IMAX Corporation (NYSE:IMAX) has experienced a decline in interest from the smart money, it’s safe to say that there is a sect of money managers that decided to sell off their entire stakes last quarter. At the top of the heap, Richard McGuire’s Marcato Capital Management sold off the biggest stake of the 700 funds watched by Insider Monkey, worth close to $70 million in stock. Mario Gabelli’s fund, GAMCO Investors, also sold off its stock, about $1.3 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 check out hedge fund activity in other stocks – not necessarily in the same industry as IMAX Corporation (NYSE:IMAX) but similarly valued. These stocks are Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Matthews International Corp (NASDAQ:MATW), MicroStrategy Incorporated (NASDAQ:MSTR), and Nexa Resources S.A. (NYSE:NEXA). This group of stocks’ market values match IMAX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KLIC | 22 | 257373 | 2 |
| MATW | 12 | 51902 | 1 |
| MSTR | 25 | 232294 | 5 |
| NEXA | 9 | 20541 | 1 |
| Average | 17 | 140528 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $41 million in IMAX’s case. MicroStrategy Incorporated (NASDAQ:MSTR) is the most popular stock in this table. On the other hand Nexa Resources S.A. (NYSE:NEXA) is the least popular one with only 9 bullish hedge fund positions. IMAX Corporation (NYSE:IMAX) 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 MSTR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
