We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether MakeMyTrip Limited (NASDAQ:MMYT) is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
MakeMyTrip Limited (NASDAQ:MMYT) shareholders have witnessed an increase in support from the world’s most elite money managers recently. MMYT was in 14 hedge funds’ portfolios at the end of December. There were 10 hedge funds in our database with MMYT positions at the end of the previous quarter. Our calculations also showed that MMYT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Daniel Gold of QVT Financial
Now we’re going to go over the key hedge fund action surrounding MakeMyTrip Limited (NASDAQ:MMYT).
What have hedge funds been doing with MakeMyTrip Limited (NASDAQ:MMYT)?
Heading into the first quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MMYT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GMT Capital held the most valuable stake in MakeMyTrip Limited (NASDAQ:MMYT), which was worth $35.1 million at the end of the third quarter. On the second spot was QVT Financial which amassed $12.8 million worth of shares. Millennium Management, Fisher Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position QVT Financial allocated the biggest weight to MakeMyTrip Limited (NASDAQ:MMYT), around 2.5% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 1.35 percent of its 13F equity portfolio to MMYT.
As industrywide interest jumped, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in MakeMyTrip Limited (NASDAQ:MMYT). Millennium Management had $5 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.4 million position during the quarter. The following funds were also among the new MMYT investors: Paul Tudor Jones’s Tudor Investment Corp, Frank Slattery’s Symmetry Peak Management, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to MakeMyTrip Limited (NASDAQ:MMYT). These stocks are Glaukos Corporation (NYSE:GKOS), Bottomline Technologies (NASDAQ:EPAY), JELD-WEN Holding, Inc. (NYSE:JELD), and Alamos Gold Inc (NYSE:AGI). This group of stocks’ market valuations are similar to MMYT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GKOS | 16 | 133423 | 4 |
| EPAY | 17 | 132162 | -5 |
| JELD | 29 | 333396 | 15 |
| AGI | 16 | 240507 | 0 |
| Average | 19.5 | 209872 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $72 million in MMYT’s case. JELD-WEN Holding, Inc. (NYSE:JELD) is the most popular stock in this table. On the other hand Glaukos Corporation (NYSE:GKOS) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks MakeMyTrip Limited (NASDAQ:MMYT) is even less popular than GKOS. Hedge funds dodged a bullet by taking a bearish stance towards MMYT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately MMYT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MMYT investors were disappointed as the stock returned -44.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
