Where Do Hedge Funds Stand On Macy’s, Inc. (M)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Macy’s, Inc. (NYSE:M).

Macy’s, Inc. (NYSE:M) investors should pay attention to a decrease in hedge fund interest recently. Macy’s, Inc. (NYSE:M) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 67. There were 34 hedge funds in our database with M positions at the end of the fourth quarter. Our calculations also showed that M isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Now let’s take a glance at the recent hedge fund action surrounding Macy’s, Inc. (NYSE:M).

Do Hedge Funds Think M Is A Good Stock To Buy Now?

At first quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in M a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Yacktman Asset Management held the most valuable stake in Macy’s, Inc. (NYSE:M), which was worth $150.5 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $117.5 million worth of shares. Arrowstreet Capital, Millennium Management, and Contrarius Investment Management 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 Contrarius Investment Management allocated the biggest weight to Macy’s, Inc. (NYSE:M), around 5.03% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, dishing out 1.57 percent of its 13F equity portfolio to M.

Due to the fact that Macy’s, Inc. (NYSE:M) has experienced bearish sentiment from hedge fund managers, we can see that there exists a select few funds who sold off their positions entirely by the end of the first quarter. Interestingly, Robert Pohly’s Samlyn Capital dumped the biggest investment of all the hedgies followed by Insider Monkey, totaling an estimated $19.3 million in stock. Daniel Kretinsky’s fund, Vesa Equity Investment, also dropped its stock, about $14 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Macy’s, Inc. (NYSE:M). These stocks are Grand Canyon Education Inc (NASDAQ:LOPE), Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS), Grupo Televisa SAB (NYSE:TV), Beam Therapeutics Inc. (NASDAQ:BEAM), Webster Financial Corporation (NYSE:WBS), and United Bankshares, Inc. (NASDAQ:UBSI). All of these stocks’ market caps are similar to M’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $407 million. That figure was $790 million in M’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Macy’s, Inc. (NYSE:M) is more popular among hedge funds. Our overall hedge fund sentiment score for M is 65.9. 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. 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 22.8% in 2021 through July 2nd and still managed to beat the market by 6 percentage points. Hedge funds were also right about betting on M, though not to the same extent, as the stock returned 15% since the end of March (through July 2nd) and outperformed the market as well.

Suggested Articles:

• How to Best Use Insider Monkey To Increase Your Returns
• Billionaire Lee Ainslie’s Top 10 Stock Picks
• Amish Mehta and SQN Investors’ Top Picks

Disclosure: None. This article was originally published at Insider Monkey.