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2019 Review: Top Hedge Fund Stocks vs. Ferrari N.V. (RACE)

Debasis Saha

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards Ferrari N.V. (NYSE:RACE).

Ferrari N.V. (NYSE:RACE) has experienced an increase in enthusiasm from smart money in recent months. RACE was in 32 hedge funds' portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with RACE holdings at the end of the previous quarter. Our calculations also showed that RACE isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

According to most shareholders, hedge funds are perceived as slow, outdated financial tools of the past. While there are more than 8000 funds trading at the moment, Our researchers choose to focus on the bigwigs of this group, about 750 funds. These hedge fund managers watch over the majority of all hedge funds' total capital, and by observing their finest equity investments, Insider Monkey has unearthed numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_745223" align="alignnone" width="1613"] Daniel Sundheim of D1 Capital Partners[/caption]

Daniel Sundheim D1 Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's take a gander at the key hedge fund action regarding Ferrari N.V. (NYSE:RACE).

What does smart money think about Ferrari N.V. (NYSE:RACE)?

Heading into the fourth quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in RACE 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.

Is RACE A Good Stock To Buy?

Among these funds, D1 Capital Partners held the most valuable stake in Ferrari N.V. (NYSE:RACE), which was worth $387 million at the end of the third quarter. On the second spot was Melvin Capital Management which amassed $311.3 million worth of shares. Darsana Capital Partners, Alatus Capital, and Renaissance Technologies 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 Alatus Capital allocated the biggest weight to Ferrari N.V. (NYSE:RACE), around 45.34% of its 13F portfolio. Aquamarine Capital Management is also relatively very bullish on the stock, designating 15.59 percent of its 13F equity portfolio to RACE.

Now, some big names have jumped into Ferrari N.V. (NYSE:RACE) headfirst. Renaissance Technologies, assembled the largest position in Ferrari N.V. (NYSE:RACE). Renaissance Technologies had $78 million invested in the company at the end of the quarter. Anthony Joseph Vaccarino's North Fourth Asset Management also initiated a $9 million position during the quarter. The following funds were also among the new RACE investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, David E. Shaw's D E Shaw, and Richard Driehaus's Driehaus Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ferrari N.V. (NYSE:RACE) but similarly valued. These stocks are Keurig Dr Pepper Inc. (NASDAQ:KDP), FedEx Corporation (NYSE:FDX), National Grid plc (NYSE:NGG), and Dell Technologies Inc. (NYSE:DELL). All of these stocks' market caps are similar to RACE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KDP,20,669516,-1 FDX,40,1369398,0 NGG,10,534812,2 DELL,45,2444313,5 Average,28.75,1254510,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $1255 million. That figure was $1531 million in RACE's case. Dell Technologies Inc. (NYSE:DELL) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 10 bullish hedge fund positions. Ferrari N.V. (NYSE:RACE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on RACE as the stock returned 71% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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