“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Mackinac Financial Corporation (NASDAQ:MFNC).
Is Mackinac Financial Corporation (NASDAQ:MFNC) undervalued? Money managers are taking a bullish view. The number of long hedge fund positions moved up by 1 in recent months. Our calculations also showed that MFNC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MFNC was in 5 hedge funds’ portfolios at the end of September. There were 4 hedge funds in our database with MFNC 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.
To most market participants, hedge funds are perceived as slow, outdated financial vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the elite of this club, about 750 funds. These investment experts command the majority of the hedge fund industry’s total asset base, and by observing their best investments, Insider Monkey has identified various investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a glance at the latest hedge fund action regarding Mackinac Financial Corporation (NASDAQ:MFNC).
How are hedge funds trading Mackinac Financial Corporation (NASDAQ:MFNC)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MFNC over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, EJF Capital was the largest shareholder of Mackinac Financial Corporation (NASDAQ:MFNC), with a stake worth $8.1 million reported as of the end of September. Trailing EJF Capital was Tontine Asset Management, which amassed a stake valued at $4 million. Renaissance Technologies, Minerva Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Mackinac Financial Corporation (NASDAQ:MFNC), around 1.11% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 0.57 percent of its 13F equity portfolio to MFNC.
As one would reasonably expect, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, created the largest position in Mackinac Financial Corporation (NASDAQ:MFNC). Millennium Management had $0.2 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mackinac Financial Corporation (NASDAQ:MFNC) but similarly valued. We will take a look at Vapotherm, Inc. (NYSE:VAPO), Calithera Biosciences Inc (NASDAQ:CALA), Yatra Online, Inc. (NASDAQ:YTRA), and Delta Apparel, Inc. (NYSEAMERICAN:DLA). This group of stocks’ market caps are similar to MFNC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VAPO | 8 | 43104 | 2 |
| CALA | 12 | 34142 | -3 |
| YTRA | 7 | 42270 | 0 |
| DLA | 2 | 7416 | -1 |
| Average | 7.25 | 31733 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $14 million in MFNC’s case. Calithera Biosciences Inc (NASDAQ:CALA) is the most popular stock in this table. On the other hand Delta Apparel, Inc. (NYSEAMERICAN:DLA) is the least popular one with only 2 bullish hedge fund positions. Mackinac Financial Corporation (NASDAQ:MFNC) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MFNC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MFNC investors were disappointed as the stock returned 1.8% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
