It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like McGraw Hill Financial Inc (NYSE:MHFI).
McGraw Hill Financial Inc (NYSE:MHFI) has experienced an increase in hedge fund sentiment recently. MHFI was in 56 hedge funds’ portfolios at the end of the third quarter of 2015. There were 51 hedge funds in our database with MHFI holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Kellogg Company (NYSE:K), Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), and The Allstate Corporation (NYSE:ALL) to gather more data points.
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With all of this in mind, let’s analyze the latest action regarding McGraw Hill Financial Inc (NYSE:MHFI).
How are hedge funds trading McGraw Hill Financial Inc (NYSE:MHFI)?
At the end of the third quarter, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Egerton Capital Limited, managed by John Armitage, holds the biggest position in McGraw Hill Financial Inc (NYSE:MHFI). Egerton Capital Limited has a $450.4 million position in the stock, comprising 5.1% of its 13F portfolio. On Egerton Capital Limited’s heels is Highfields Capital Management, managed by Jonathon Jacobson, which holds a $391.4 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain David Cohen and Harold Levy’s Iridian Asset Management, William von Mueffling’s Cantillon Capital Management and D E Shaw.
Consequently, some big names have been driving this bullishness. RIT Capital Partners, managed by Jacob Rothschild, assembled the biggest position in McGraw Hill Financial Inc (NYSE:MHFI). RIT Capital Partners had $58.4 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $14.7 million position during the quarter. The following funds were also among the new MHFI investors: George Hall’s Clinton Group, Peter Muller’s PDT Partners, and Joel Greenblatt’s Gotham Asset Management.
Let’s go over hedge fund activity in other stocks similar to McGraw Hill Financial Inc (NYSE:MHFI). We will take a look at Kellogg Company (NYSE:K), Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), The Allstate Corporation (NYSE:ALL), and AvalonBay Communities Inc (NYSE:AVB). This group of stocks’ market values are similar to MHFI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| K | 30 | 778773 | 8 |
| CHT | 9 | 81505 | 4 |
| ALL | 39 | 1529914 | -1 |
| AVB | 24 | 634821 | 2 |
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $756 million. That figure was $2584 million in MHFI’s case. The Allstate Corporation (NYSE:ALL) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks McGraw Hill Financial Inc (NYSE:MHFI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
