Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about MSCI Inc (NYSE:MSCI) in this article.
MSCI Inc (NYSE:MSCI) has seen an increase in support from the world’s most elite money managers recently. MSCI Inc (NYSE:MSCI) was in 44 hedge funds’ portfolios at the end of June. The all time high for this statistics is 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 29 hedge funds in our database with MSCI holdings at the end of March. Our calculations also showed that MSCI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Ken Fisher of Fisher Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a look at the new hedge fund action encompassing MSCI Inc (NYSE:MSCI).
What does smart money think about MSCI Inc (NYSE:MSCI)?
At the end of the second quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 52% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in MSCI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, SCGE Management, managed by Christopher Lyle, holds the number one position in MSCI Inc (NYSE:MSCI). SCGE Management has a $147.5 million position in the stock, comprising 2.8% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $68.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include James Parsons’s Junto Capital Management, Tom Gayner’s Markel Gayner Asset Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Totem Point Management allocated the biggest weight to MSCI Inc (NYSE:MSCI), around 5.99% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, setting aside 3.94 percent of its 13F equity portfolio to MSCI.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Junto Capital Management, managed by James Parsons, created the largest position in MSCI Inc (NYSE:MSCI). Junto Capital Management had $54.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $35.3 million position during the quarter. The following funds were also among the new MSCI investors: Israel Englander’s Millennium Management, Anand Parekh’s Alyeska Investment Group, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to MSCI Inc (NYSE:MSCI). These stocks are Marriott International Inc (NASDAQ::MAR), ResMed Inc. (NYSE:RMD), SYSCO Corporation (NYSE:SYY), Cintas Corporation (NASDAQ:CTAS), WEC Energy Group, Inc. (NYSE:WEC), The Clorox Company (NYSE:CLX), and Verisk Analytics, Inc. (NASDAQ:VRSK). All of these stocks’ market caps resemble MSCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAR | 48 | 2159338 | 1 |
| RMD | 25 | 224162 | -8 |
| SYY | 42 | 2177488 | 7 |
| CTAS | 34 | 531899 | -8 |
| WEC | 30 | 290696 | 1 |
| CLX | 36 | 1488687 | -5 |
| VRSK | 36 | 981827 | 5 |
| Average | 35.9 | 1122014 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.9 hedge funds with bullish positions and the average amount invested in these stocks was $1122 million. That figure was $730 million in MSCI’s case. Marriott International Inc (NASDAQ::MAR) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 25 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. Our overall hedge fund sentiment score for MSCI is 81.3. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately MSCI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MSCI were disappointed as the stock returned 5.2% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Msci Inc. (NYSE:MSCI)
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Disclosure: None. This article was originally published at Insider Monkey.
