In this article you are going to find out whether hedge funds think Matson Inc. (NYSE:MATX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Matson Inc. (NYSE:MATX) undervalued? The smart money was in an optimistic mood. The number of bullish hedge fund positions improved by 5 in recent months. Matson Inc. (NYSE:MATX) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MATX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 14 hedge funds in our database with MATX positions at the end of the fourth quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Louis Navellier of Navellier & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the fresh hedge fund action encompassing Matson Inc. (NYSE:MATX).
Do Hedge Funds Think MATX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MATX over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Matson Inc. (NYSE:MATX) was held by Millennium Management, which reported holding $7.5 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $5.6 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Matson Inc. (NYSE:MATX), around 0.31% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to MATX.
With a general bullishness amongst the heavyweights, some big names have jumped into Matson Inc. (NYSE:MATX) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Matson Inc. (NYSE:MATX). Marshall Wace LLP had $1.4 million invested in the company at the end of the quarter. Louis Navellier’s Navellier & Associates also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new MATX investors: Mika Toikka’s AlphaCrest Capital Management, Qing Li’s Sciencast Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Matson Inc. (NYSE:MATX) but similarly valued. These stocks are Perpetua Resources Corp. (NASDAQ:PPTA), Opko Health Inc. (NYSE:OPK), AeroVironment, Inc. (NASDAQ:AVAV), Stepan Company (NYSE:SCL), First Interstate Bancsystem Inc (NASDAQ:FIBK), Group 1 Automotive, Inc. (NYSE:GPI), and Kennedy-Wilson Holdings Inc (NYSE:KW). This group of stocks’ market values match MATX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPTA | 3 | 167659 | 3 |
| OPK | 15 | 29181 | -1 |
| AVAV | 16 | 137175 | 0 |
| SCL | 10 | 28771 | -2 |
| FIBK | 14 | 22745 | 3 |
| GPI | 26 | 304299 | 6 |
| KW | 16 | 499333 | 0 |
| Average | 14.3 | 169880 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $32 million in MATX’s case. Group 1 Automotive, Inc. (NYSE:GPI) is the most popular stock in this table. On the other hand Perpetua Resources Corp. (NASDAQ:PPTA) is the least popular one with only 3 bullish hedge fund positions. Matson Inc. (NYSE:MATX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MATX is 74.8. 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 positive signal but 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately MATX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MATX were disappointed as the stock returned -2% since the end of March (through 7/23) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
