At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Maverix Metals Inc. (NYSE:MMX).
Is Maverix Metals Inc. (NYSE:MMX) a buy, sell, or hold? Hedge funds are taking a bullish view. The number of long hedge fund positions inched up by 1 lately. Our calculations also showed that MMX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Ken Griffin of Citadel Investment Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the latest hedge fund action regarding Maverix Metals Inc. (NYSE:MMX).
Hedge fund activity in Maverix Metals Inc. (NYSE:MMX)
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MMX over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sprott Asset Management held the most valuable stake in Maverix Metals Inc. (NYSE:MMX), which was worth $11 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $1.3 million worth of shares. Citadel Investment Group was 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 Sprott Asset Management allocated the biggest weight to Maverix Metals Inc. (NYSE:MMX), around 1.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0012 percent of its 13F equity portfolio to MMX.
As one would reasonably expect, key money managers have jumped into Maverix Metals Inc. (NYSE:MMX) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Maverix Metals Inc. (NYSE:MMX). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Maverix Metals Inc. (NYSE:MMX) but similarly valued. We will take a look at Byline Bancorp, Inc. (NYSE:BY), Verso Corporation (NYSE:VRS), Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), and United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC). This group of stocks’ market caps resemble MMX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BY | 10 | 10976 | 0 |
| VRS | 20 | 92202 | -2 |
| CPRX | 20 | 79699 | 1 |
| UIHC | 9 | 4573 | -3 |
| Average | 14.75 | 46863 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $12 million in MMX’s case. Verso Corporation (NYSE:VRS) is the most popular stock in this table. On the other hand United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Maverix Metals Inc. (NYSE:MMX) is even less popular than UIHC. Hedge funds clearly dropped the ball on MMX as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on MMX as the stock returned 56.8% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.