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 Total Return Index ETFs returned approximately 27.5% in 2019 (through the end of November). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same 11-month period, with the majority 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’ consensus 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 Acushnet Holdings Corp. (NYSE:GOLF).
Is Acushnet Holdings Corp. (NYSE:GOLF) the right investment to pursue these days? Hedge funds are getting more optimistic. The number of long hedge fund positions improved by 1 recently. Our calculations also showed that GOLF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GOLF was in 12 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with GOLF holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the new hedge fund action surrounding Acushnet Holdings Corp. (NYSE:GOLF).
How are hedge funds trading Acushnet Holdings Corp. (NYSE:GOLF)?
Heading into the fourth quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in GOLF a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Acushnet Holdings Corp. (NYSE:GOLF) was held by Sensato Capital Management, which reported holding $7.4 million worth of stock at the end of September. It was followed by Millennium Management with a $5.3 million position. Other investors bullish on the company included Winton Capital Management, AQR Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Sensato Capital Management allocated the biggest weight to Acushnet Holdings Corp. (NYSE:GOLF), around 2.83% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to GOLF.
As aggregate interest increased, key hedge funds have jumped into Acushnet Holdings Corp. (NYSE:GOLF) headfirst. Paloma Partners, managed by Donald Sussman, initiated the biggest position in Acushnet Holdings Corp. (NYSE:GOLF). Paloma Partners had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Acushnet Holdings Corp. (NYSE:GOLF) but similarly valued. We will take a look at NeoGenomics, Inc. (NASDAQ:NEO), Insight Enterprises, Inc. (NASDAQ:NSIT), PTC Therapeutics, Inc. (NASDAQ:PTCT), and National Storage Affiliates Trust (NYSE:NSA). This group of stocks’ market caps resemble GOLF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEO | 14 | 38280 | -3 |
| NSIT | 21 | 115936 | 7 |
| PTCT | 34 | 557929 | 6 |
| NSA | 15 | 137737 | -3 |
| Average | 21 | 212471 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $21 million in GOLF’s case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand NeoGenomics, Inc. (NASDAQ:NEO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Acushnet Holdings Corp. (NYSE:GOLF) is even less popular than NEO. Hedge funds clearly dropped the ball on GOLF as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on GOLF as the stock returned 14.4% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
