Matson, Inc. (MATX): Are Hedge Funds Right About This Stock?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is Matson, Inc. (NYSE:MATX) going to take off soon? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings slashed by 1 in recent months. MATX was in 15 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with MATX holdings at the end of the previous quarter. At the end of this article we will also compare MATX to other stocks including NxStage Medical, Inc. (NASDAQ:NXTM), Crestwood Equity Partners LP (NYSE:CEQP), and Rexford Industrial Realty Inc (NYSE:REXR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about Matson, Inc. (NYSE:MATX)?

Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 6% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in MATX at the beginning of this year. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Hawk Ridge Management, led by David Brown, holds the biggest position in Matson, Inc. (NYSE:MATX). Hawk Ridge Management has a $7.1 million position in the stock, comprising 3.8% of its 13F portfolio. Sitting at the No. 2 spot is Joel Greenblatt of Gotham Asset Management, with a $2.6 million position. Remaining professional money managers with similar optimism encompass Cliff Asness’ AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Richard Driehaus’ Driehaus Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that Matson, Inc. (NYSE:MATX) has weathered a decline in interest from the smart money, it’s safe to say that there is a sect of funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Jim Simons’ Renaissance Technologies got rid of the largest investment of the “upper crust” of funds followed by Insider Monkey, worth about $9.5 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $2.4 million worth.

Let’s check out hedge fund activity in other stocks similar to Matson, Inc. (NYSE:MATX). These stocks are NxStage Medical, Inc. (NASDAQ:NXTM), Crestwood Equity Partners LP (NYSE:CEQP), Rexford Industrial Realty Inc (NYSE:REXR), and TopBuild Corp (NYSE:BLD). This group of stocks’ market caps are similar to MATX’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $22 million in MATX’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 7 bullish hedge fund positions. Matson, Inc.(NYSE:MATX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NXTM might be a better candidate to consider taking a long position in.

Disclosure: None