Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Macquarie Infrastructure Corporation (NYSE:MIC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MIC a good stock to buy now? The smart money was taking a pessimistic view. The number of long hedge fund bets decreased by 7 in recent months. Macquarie Infrastructure Corporation (NYSE:MIC) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 69. Our calculations also showed that MIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s analyze the recent hedge fund action encompassing Macquarie Infrastructure Corporation (NYSE:MIC).
Do Hedge Funds Think MIC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in MIC over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Eminence Capital was the largest shareholder of Macquarie Infrastructure Corporation (NYSE:MIC), with a stake worth $228.3 million reported as of the end of September. Trailing Eminence Capital was Hawk Ridge Management, which amassed a stake valued at $35.3 million. Rubric Capital Management, GAMCO Investors, and Cove Street Capital were 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 Litespeed Management allocated the biggest weight to Macquarie Infrastructure Corporation (NYSE:MIC), around 11.52% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, designating 5.12 percent of its 13F equity portfolio to MIC.
Because Macquarie Infrastructure Corporation (NYSE:MIC) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that David Brown’s Hawk Ridge Management dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising about $6.9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dropped its stock, about $5.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 7 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Macquarie Infrastructure Corporation (NYSE:MIC). We will take a look at Umpqua Holdings Corp (NASDAQ:UMPQ), ADC Therapeutics SA (NYSE:ADCT), DCP Midstream LP (NYSE:DCP), Patterson Companies, Inc. (NASDAQ:PDCO), ViaSat, Inc. (NASDAQ:VSAT), Cushman & Wakefield plc (NYSE:CWK), and Avista Corp (NYSE:AVA). This group of stocks’ market caps match MIC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UMPQ | 26 | 202936 | 2 |
| ADCT | 19 | 384941 | 4 |
| DCP | 3 | 5523 | 1 |
| PDCO | 18 | 82656 | -4 |
| VSAT | 30 | 907647 | 7 |
| CWK | 12 | 87064 | -5 |
| AVA | 20 | 74564 | -1 |
| Average | 18.3 | 249333 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $249 million. That figure was $520 million in MIC’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Macquarie Infrastructure Corporation (NYSE:MIC) is more popular among hedge funds. Our overall hedge fund sentiment score for MIC is 61.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on MIC as the stock returned 38.1% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Macquarie Infrastructure Corp (NYSE:MIC)
Follow Macquarie Infrastructure Corp (NYSE:MIC)
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Disclosure: None. This article was originally published at Insider Monkey.
