The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards MP Materials Corp. (NYSE:MP).
Is MP Materials Corp. (NYSE:MP) an attractive investment today? Investors who are in the know were becoming less confident. The number of long hedge fund bets were trimmed by 9 lately. MP Materials Corp. (NYSE:MP) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 32. Our calculations also showed that MP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In today’s marketplace there are tons of metrics investors put to use to assess their holdings. Some of the less utilized metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform their index-focused peers by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
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Do Hedge Funds Think MP Is A Good Stock To Buy Now?
At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MP over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, James H. Litinsky’s JHL Capital Group has the biggest position in MP Materials Corp. (NYSE:MP), worth close to $1.6296 billion, corresponding to 100% of its total 13F portfolio. Sitting at the No. 2 spot is QVT Financial, managed by Daniel Gold, which holds a $782.3 million position; 51.7% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism comprise Leon Cooperman’s Omega Advisors, Richard Driehaus’s Driehaus Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position JHL Capital Group allocated the biggest weight to MP Materials Corp. (NYSE:MP), around 100% of its 13F portfolio. QVT Financial is also relatively very bullish on the stock, earmarking 51.65 percent of its 13F equity portfolio to MP.
Because MP Materials Corp. (NYSE:MP) has experienced falling interest from hedge fund managers, logic holds that there was a specific group of funds that elected to cut their full holdings last quarter. Intriguingly, Parvinder Thiara’s Athanor Capital dropped the largest position of the 750 funds followed by Insider Monkey, worth an estimated $77.4 million in stock, and Robert Henry Lynch’s Aristeia Capital was right behind this move, as the fund said goodbye to about $18.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 9 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MP Materials Corp. (NYSE:MP) but similarly valued. We will take a look at Littelfuse, Inc. (NASDAQ:LFUS), Thor Industries, Inc. (NYSE:THO), Endava plc (NYSE:DAVA), SYNNEX Corporation (NYSE:SNX), Callaway Golf Company (NYSE:ELY), Lumentum Holdings Inc (NASDAQ:LITE), and Huaneng Power International Inc (NYSE:HNP). This group of stocks’ market values match MP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LFUS | 27 | 483266 | 6 |
| THO | 26 | 179875 | 5 |
| DAVA | 16 | 197353 | 7 |
| SNX | 20 | 629311 | 5 |
| ELY | 39 | 559436 | -1 |
| LITE | 29 | 334727 | -2 |
| HNP | 4 | 4331 | 0 |
| Average | 23 | 341186 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $2566 million in MP’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 4 bullish hedge fund positions. MP Materials Corp. (NYSE:MP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MP is 37.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately MP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MP investors were disappointed as the stock returned -0.7% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
