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. Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Mobile Mini Inc (NASDAQ:MINI)? The smart money sentiment can provide an answer to this question.
Is Mobile Mini Inc (NASDAQ:MINI) an outstanding investment now? The best stock pickers are buying. The number of long hedge fund bets improved by 2 recently. Our calculations also showed that MINI 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.
Paul Singer of Elliott Management
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the recent hedge fund action encompassing Mobile Mini Inc (NASDAQ:MINI).
How are hedge funds trading Mobile Mini Inc (NASDAQ:MINI)?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MINI over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Mobile Mini Inc (NASDAQ:MINI) was held by Elliott Management, which reported holding $75.8 million worth of stock at the end of September. It was followed by Millennium Management with a $15.2 million position. Other investors bullish on the company included Fisher Asset Management, GLG Partners, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Rubric Capital Management allocated the biggest weight to Mobile Mini Inc (NASDAQ:MINI), around 1.08% of its 13F portfolio. Elliott Management is also relatively very bullish on the stock, earmarking 0.64 percent of its 13F equity portfolio to MINI.
As one would reasonably expect, key money managers were breaking ground themselves. GLG Partners, managed by Noam Gottesman, created the most valuable position in Mobile Mini Inc (NASDAQ:MINI). GLG Partners had $11.1 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $2.1 million position during the quarter. The other funds with brand new MINI positions are Marc Majzner’s Clearline Capital, Donald Sussman’s Paloma Partners, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Mobile Mini Inc (NASDAQ:MINI). These stocks are Denali Therapeutics Inc. (NASDAQ:DNLI), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), Forty Seven, Inc. (NASDAQ:FTSV), and Yext, Inc. (NYSE:YEXT). This group of stocks’ market values are closest to MINI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNLI | 9 | 28103 | 1 |
| SWTX | 11 | 658924 | 0 |
| FTSV | 18 | 351335 | 9 |
| YEXT | 13 | 47303 | -1 |
| Average | 12.75 | 271416 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $194 million in MINI’s case. Forty Seven, Inc. (NASDAQ:FTSV) is the most popular stock in this table. On the other hand Denali Therapeutics Inc. (NASDAQ:DNLI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mobile Mini Inc (NASDAQ:MINI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds 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 and still beat the market by 4.2 percentage points. Unfortunately MINI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MINI were disappointed as the stock returned -39% during the three months of 2020 (through April 6th) 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 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.
