Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Marcus & Millichap Inc (NYSE:MMI).
Is Marcus & Millichap Inc (NYSE:MMI) going to take off soon? Money managers are in a bearish mood. The number of bullish hedge fund bets went down by 2 recently. Our calculations also showed that MMI isn’t among the 30 most popular stocks among hedge funds. MMI was in 13 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 15 hedge funds in our database with MMI positions at the end of the previous quarter.
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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 take a gander at the fresh hedge fund action encompassing Marcus & Millichap Inc (NYSE:MMI).
How have hedgies been trading Marcus & Millichap Inc (NYSE:MMI)?
Heading into the first quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in MMI a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Marcus & Millichap Inc (NYSE:MMI) was held by Royce & Associates, which reported holding $105 million worth of stock at the end of December. It was followed by Winton Capital Management with a $7.2 million position. Other investors bullish on the company included Renaissance Technologies, Two Sigma Advisors, and Sprott Asset Management.
Judging by the fact that Marcus & Millichap Inc (NYSE:MMI) has faced falling interest from hedge fund managers, it’s easy to see that there is a sect of funds that slashed their entire stakes by the end of the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the largest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $5.4 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $3.4 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Marcus & Millichap Inc (NYSE:MMI). We will take a look at Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), Universal Insurance Holdings, Inc. (NYSE:UVE), Nevsun Resources Ltd. (NYSE:NSU), and S & T Bancorp Inc (NASDAQ:STBA). This group of stocks’ market valuations are closest to MMI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LOMA | 7 | 13624 | -4 |
| UVE | 20 | 40809 | 6 |
| NSU | 12 | 141823 | -3 |
| STBA | 8 | 4752 | 2 |
| Average | 11.75 | 50252 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $131 million in MMI’s case. Universal Insurance Holdings, Inc. (NYSE:UVE) is the most popular stock in this table. On the other hand Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) is the least popular one with only 7 bullish hedge fund positions. Marcus & Millichap Inc (NYSE:MMI) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on MMI, though not to the same extent, as the stock returned 23% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
