Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Maverix Metals Inc. (NYSE:MMX) to find out whether there were any major changes in hedge funds’ views.
Maverix Metals Inc. (NYSE:MMX) has seen a decrease in enthusiasm from smart money recently. Maverix Metals Inc. (NYSE:MMX) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. There were 9 hedge funds in our database with MMX holdings at the end of December. Our calculations also showed that MMX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the key hedge fund action regarding Maverix Metals Inc. (NYSE:MMX).
Do Hedge Funds Think MMX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MMX over the last 23 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.
The largest stake in Maverix Metals Inc. (NYSE:MMX) was held by Sprott Asset Management, which reported holding $27.8 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $1.5 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Maverix Metals Inc. (NYSE:MMX), around 1.67% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, designating 0.0022 percent of its 13F equity portfolio to MMX.
Judging by the fact that Maverix Metals Inc. (NYSE:MMX) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who were dropping their full holdings last quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest stake of the 750 funds monitored by Insider Monkey, valued at an estimated $0.9 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.7 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds last quarter.
Let’s go over 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 Alliance Resource Partners, L.P. (NASDAQ:ARLP), BEST Inc. (NYSE:BEST), Clovis Oncology Inc (NASDAQ:CLVS), Koppers Holdings Inc. (NYSE:KOP), Heritage Commerce Corp. (NASDAQ:HTBK), Interface, Inc. (NASDAQ:TILE), and Re/Max Holdings Inc (NYSE:RMAX). This group of stocks’ market valuations are closest to MMX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARLP | 7 | 37543 | 1 |
| BEST | 5 | 857 | -5 |
| CLVS | 14 | 75987 | -3 |
| KOP | 11 | 42001 | -2 |
| HTBK | 9 | 14804 | 0 |
| TILE | 12 | 28773 | -1 |
| RMAX | 8 | 49276 | -3 |
| Average | 9.4 | 35606 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $31 million in MMX’s case. Clovis Oncology Inc (NASDAQ:CLVS) is the most popular stock in this table. On the other hand BEST Inc. (NYSE:BEST) is the least popular one with only 5 bullish hedge fund positions. Maverix Metals Inc. (NYSE:MMX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMX is 27.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately MMX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MMX investors were disappointed as the stock returned 1.6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Maverix Metals Inc. (NYSE:MMX)
Follow Maverix Metals Inc. (NYSE:MMX)
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Disclosure: None. This article was originally published at Insider Monkey.
