Before we spend countless hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Macy’s, Inc. (NYSE:M).
Hedge fund interest in Macy’s, Inc. (NYSE:M) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare M to other stocks including Crown Holdings, Inc. (NYSE:CCK), ICON Public Limited Company (NASDAQ:ICLR), and Bright Horizons Family Solutions Inc (NYSE:BFAM) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the fresh hedge fund action encompassing Macy’s, Inc. (NYSE:M).
Hedge fund activity in Macy’s, Inc. (NYSE:M)
At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in M over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in Macy’s, Inc. (NYSE:M), worth close to $353.1 million, comprising 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $92.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Ray Dalio’s Bridgewater Associates.
Due to the fact that Macy’s, Inc. (NYSE:M) has witnessed falling interest from the aggregate hedge fund industry, we can see that there was a specific group of hedgies who sold off their full holdings heading into Q3. Interestingly, Robert Bishop’s Impala Asset Management sold off the largest investment of all the hedgies followed by Insider Monkey, comprising close to $65.1 million in call options, and Gregg Moskowitz’s Interval Partners was right behind this move, as the fund said goodbye to about $11.9 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 also examine hedge fund activity in other stocks – not necessarily in the same industry as Macy’s, Inc. (NYSE:M) but similarly valued. We will take a look at Crown Holdings, Inc. (NYSE:CCK), ICON Public Limited Company (NASDAQ:ICLR), Bright Horizons Family Solutions Inc (NYSE:BFAM), and Masimo Corporation (NASDAQ:MASI). This group of stocks’ market caps match M’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCK | 38 | 1021922 | 3 |
| ICLR | 27 | 809057 | 4 |
| BFAM | 18 | 294100 | 2 |
| MASI | 34 | 485427 | 1 |
| Average | 29.25 | 652627 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $653 million. That figure was $734 million in M’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Bright Horizons Family Solutions Inc (NYSE:BFAM) is the least popular one with only 18 bullish hedge fund positions. Macy’s, Inc. (NYSE:M) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately M wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on M were disappointed as the stock returned -13.6% during the same 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.
