In this article we are going to use hedge fund sentiment as a tool and determine whether Masonite International Corp (NYSE:DOOR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Masonite International Corp (NYSE:DOOR) going to take off soon? Hedge funds were getting more optimistic. The number of long hedge fund positions advanced by 3 in recent months. Masonite International Corp (NYSE:DOOR) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DOOR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kevin Oram of Praesidium Investment Management Company
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Do Hedge Funds Think DOOR Is A Good Stock To Buy Now?
At the end of March, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in DOOR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Praesidium Investment Management Company held the most valuable stake in Masonite International Corp (NYSE:DOOR), which was worth $217.4 million at the end of the fourth quarter. On the second spot was Sunriver Management which amassed $27.3 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and Soapstone Capital 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 Praesidium Investment Management Company allocated the biggest weight to Masonite International Corp (NYSE:DOOR), around 11.21% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, setting aside 6.15 percent of its 13F equity portfolio to DOOR.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Masonite International Corp (NYSE:DOOR). Citadel Investment Group had $7.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $5.8 million investment in the stock during the quarter. The other funds with brand new DOOR positions are Ken Grossman and Glen Schneider’s SG Capital Management, Michael Gelband’s ExodusPoint Capital, and Jonathan Soros’s JS Capital.
Let’s go over hedge fund activity in other stocks similar to Masonite International Corp (NYSE:DOOR). These stocks are SITE Centers Corp. (NYSE:SITC), Cooper Tire & Rubber Company (NYSE:CTB), Enable Midstream Partners LP (NYSE:ENBL), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Cedar Fair, L.P. (NYSE:FUN), Burning Rock Biotech Limited (NASDAQ:BNR), and Graham Holdings Co (NYSE:GHC). This group of stocks’ market values are closest to DOOR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SITC | 9 | 71139 | -2 |
| CTB | 24 | 307379 | 1 |
| ENBL | 6 | 27004 | 3 |
| TARO | 8 | 81146 | 2 |
| FUN | 14 | 157490 | 0 |
| BNR | 11 | 104426 | -1 |
| GHC | 23 | 550549 | -2 |
| Average | 13.6 | 185590 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $406 million in DOOR’s case. Cooper Tire & Rubber Company (NYSE:CTB) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Masonite International Corp (NYSE:DOOR) is more popular among hedge funds. Our overall hedge fund sentiment score for DOOR is 88. 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 beat the market by 6 percentage points. Unfortunately DOOR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DOOR were disappointed as the stock returned -2.2% since the end of the first quarter (through 7/2) 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 most of these stocks already outperformed the market since 2019.
Follow Masonite International Corp (NYSE:DOOR)
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Disclosure: None. This article was originally published at Insider Monkey.
