Masco Corporation (MAS): Are Hedge Funds Right About This Stock?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Masco Corporation (NYSE:MAS).

Is Masco Corporation (NYSE:MAS) a buy, sell, or hold? Hedge funds are in a bullish mood. The number of bullish hedge fund bets increased by 5 recently. MAS was in 38 hedge funds’ portfolios at the end of September. There were 33 hedge funds in our database with MAS positions at the end of the previous quarter. At the end of this article we will also compare MAS to other stocks including Advanced Semiconductor Engineering (ADR) (NYSE:ASX), LKQ Corporation (NASDAQ:LKQ), and Western Gas Equity Partners LP (NYSE:WGP) to get a better sense of its popularity.

Now, we’re going to take a look at the new action encompassing Masco Corporation (NYSE:MAS).

What have hedge funds been doing with Masco Corporation (NYSE:MAS)?

At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Masco Corporation (NYSE:MAS). Iridian Asset Management has a $481.8 million position in the stock, comprising 4.1% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $117.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Richard S. Pzena’s Pzena Investment Management,  Columbus Circle Investors and Edgar Wachenheim’s Greenhaven Associates.

As aggregate interest increased, specific money managers have jumped into Masco Corporation (NYSE:MAS) headfirst. Columbus Circle Investors established the most valuable position in Masco Corporation (NYSE:MAS). Columbus Circle Investors had $76.6 million invested in the company at the end of the quarter. Christopher A. Winham’s Tide Point Capital also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Gregg Moskowitz’s Interval Partners, and Gabriel Plotkin’s Melvin Capital Management.

Let’s check out hedge fund activity in other stocks similar to Masco Corporation (NYSE:MAS). We will take a look at Advanced Semiconductor Engineering (ADR) (NYSE:ASX), LKQ Corporation (NASDAQ:LKQ), Western Gas Equity Partners LP (NYSE:WGP), and Ball Corporation (NYSE:BLL). All of these stocks’ market caps match MAS’s market cap.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $1,336 million in MAS’s case. Ball Corporation (NYSE:BLL) is the most popular stock in this table. On the other hand Western Gas Equity Partners LP (NYSE:WGP) is the least popular one with only 9 bullish hedge fund positions. Along with BLL, Masco Corporation (NYSE:MAS) is the most popular stock in this group and that makes the stock worth a closer look.