The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Msci Inc (NYSE:MSCI) and see how it was affected.
Msci Inc (NYSE:MSCI) has seen an increase in support from the world’s most elite money managers lately. MSCI was in 26 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with MSCI holdings at the end of the previous quarter. At the end of this article we will also compare MSCI to other stocks, including American Capital Agency Corp. (NASDAQ:AGNC), Centene Corp (NYSE:CNC), and Jones Lang LaSalle Inc (NYSE:JLL) to get a better sense of its popularity.
Follow Msci Inc. (NYSE:MSCI)
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In today’s marketplace there are a large number of signals stock market investors have at their disposal to value stocks. A couple of the less known signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the broader indices by a very impressive amount (see the details here).
Keeping this in mind, we’re going to view the latest action surrounding Msci Inc (NYSE:MSCI).
Hedge fund activity in Msci Inc (NYSE:MSCI)
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 8% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the biggest position in Msci Inc (NYSE:MSCI), worth close to $553.5 million, amounting to 3.2% of its total 13F portfolio. Coming in second is David Blood and Al Gore of Generation Investment Management, with a $193.5 million position; 2.8% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of Anand Desai’s Darsana Capital Partners, D. E. Shaw’s D E Shaw and James Parsons’s Junto Capital Management.
Now, key hedge funds were leading the bulls’ herd. Echo Street Capital Management, managed by Greg Poole, created the most valuable position in Msci Inc (NYSE:MSCI). The fund reportedly had $6.4 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $5.9 million position during the quarter. The other funds with new positions in the stock are Simon Sadler’s Segantii Capital, Paul Tudor Jones’s Tudor Investment Corp, and Jacob Gottlieb’s Visium Asset Management.
Let’s now review hedge fund activity in other stocks similar to Msci Inc (NYSE:MSCI). These stocks are American Capital Agency Corp. (NASDAQ:AGNC), Centene Corp (NYSE:CNC), Jones Lang LaSalle Inc (NYSE:JLL), and Omega Healthcare Investors Inc (NYSE:OHI). This group of stocks’ market values match MSCI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGNC | 26 | 472707 | 7 |
| CNC | 37 | 489392 | 15 |
| JLL | 25 | 515060 | 4 |
| OHI | 14 | 62359 | 0 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $1.07 billion in MSCI’s case. Centene Corp (NYSE:CNC) is the most popular stock in this table, while Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 14 bullish hedge fund positions. Msci Inc (NYSE:MSCI) 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 CNC might be a better candidate to consider a long position.
