As we already know from media reports and hedge fund investor letters, many hedge funds lost money in October, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Morningstar, Inc. (NASDAQ:MORN) in this article.
Morningstar, Inc. (NASDAQ:MORN) has experienced an increase in hedge fund interest recently. MORN was in 19 hedge funds’ portfolios at the end of the third quarter of 2018. There were 17 hedge funds in our database with MORN holdings at the end of the previous quarter. Our calculations also showed that morn isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to take a glance at the latest hedge fund action regarding Morningstar, Inc. (NASDAQ:MORN).
What does the smart money think about Morningstar, Inc. (NASDAQ:MORN)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the second quarter of 2018. By comparison, 16 hedge funds held shares or bullish call options in MORN heading into this year. 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 Morningstar, Inc. (NASDAQ:MORN) was held by Renaissance Technologies, which reported holding $81.1 million worth of stock at the end of September. It was followed by Royce & Associates with a $70 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Fisher Asset Management.
With a general bullishness amongst the heavyweights, key money managers have jumped into Morningstar, Inc. (NASDAQ:MORN) headfirst. Citadel Investment Group, managed by Ken Griffin, established the largest position in Morningstar, Inc. (NASDAQ:MORN). Citadel Investment Group had $2.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $0.8 million position during the quarter. The only other fund with a brand new MORN position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to Morningstar, Inc. (NASDAQ:MORN). These stocks are Synovus Financial Corp. (NYSE:SNV), Antero Midstream Partners LP (NYSE:AM), The Howard Hughes Corporation (NYSE:HHC), and Itau CorpBanca (NYSE:ITCB). All of these stocks’ market caps are closest to MORN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNV | 32 | 753690 | 3 |
| AM | 11 | 51766 | 4 |
| HHC | 19 | 715682 | 0 |
| ITCB | 1 | 4986 | 0 |
| Average | 15.75 | 381531 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $204 million in MORN’s case. Synovus Financial Corp. (NYSE:SNV) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 1 bullish hedge fund positions. Morningstar, Inc. (NASDAQ:MORN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SNV might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
