Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.4% through the end of November and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Meta Financial Group Inc. (NASDAQ:CASH) an attractive investment now? Hedge funds are becoming more confident. The number of long hedge fund bets inched up by 2 in recent months. Our calculations also showed that CASH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CASH was in 14 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with CASH holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at present, We hone in on the bigwigs of this group, about 750 funds. It is estimated that this group of investors shepherd most of the hedge fund industry’s total capital, and by paying attention to their unrivaled investments, Insider Monkey has unsheathed various investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action regarding Meta Financial Group Inc. (NASDAQ:CASH).
How are hedge funds trading Meta Financial Group Inc. (NASDAQ:CASH)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in CASH a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Meta Financial Group Inc. (NASDAQ:CASH) was held by Nantahala Capital Management, which reported holding $58.7 million worth of stock at the end of September. It was followed by Steamboat Capital Partners with a $25.2 million position. Other investors bullish on the company included Second Curve Capital, Driehaus Capital, and Osterweis Capital Management. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to Meta Financial Group Inc. (NASDAQ:CASH), around 9.11% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, earmarking 7.77 percent of its 13F equity portfolio to CASH.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Meta Financial Group Inc. (NASDAQ:CASH). Arrowstreet Capital had $1.8 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace’s Marshall Wace.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Meta Financial Group Inc. (NASDAQ:CASH) but similarly valued. We will take a look at Designer Brands Inc. (NYSE:DBI), Safehold Inc. (NYSE:SAFE), G-III Apparel Group, Ltd. (NASDAQ:GIII), and Eldorado Gold Corporation (NYSE:EGO). All of these stocks’ market caps are similar to CASH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DBI | 19 | 115186 | 3 |
| SAFE | 8 | 11924 | 5 |
| GIII | 12 | 80887 | -1 |
| EGO | 13 | 137318 | 3 |
| Average | 13 | 86329 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $128 million in CASH’s case. Designer Brands Inc. (NYSE:DBI) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 8 bullish hedge fund positions. Meta Financial Group Inc. (NASDAQ:CASH) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CASH, though not to the same extent, as the stock returned 9.1% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
