Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by 4 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of MakeMyTrip Limited (NASDAQ:MMYT).
Is MakeMyTrip Limited (NASDAQ:MMYT) going to take off soon? Investors who are in the know are taking a bearish view. The number of bullish hedge fund bets went down by 1 recently. Our calculations also showed that MMYT isn't among the 30 most popular stocks among hedge funds (view video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to check out the fresh hedge fund action encompassing MakeMyTrip Limited (NASDAQ:MMYT).
What does smart money think about MakeMyTrip Limited (NASDAQ:MMYT)?
At the end of the second quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MMYT over the last 16 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in MakeMyTrip Limited (NASDAQ:MMYT) was held by GMT Capital, which reported holding $32 million worth of stock at the end of March. It was followed by QVT Financial with a $14.9 million position. Other investors bullish on the company included Fisher Asset Management, Millennium Management, and PAR Capital Management.
Seeing as MakeMyTrip Limited (NASDAQ:MMYT) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers who were dropping their full holdings heading into Q3. It's worth mentioning that Richard Driehaus's Driehaus Capital cut the largest position of the 750 funds watched by Insider Monkey, comprising an estimated $14.5 million in stock. Noam Gottesman's fund, GLG Partners, also cut its stock, about $0.9 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks similar to MakeMyTrip Limited (NASDAQ:MMYT). These stocks are Resideo Technologies, Inc. (NYSE:REZI), CNO Financial Group Inc (NYSE:CNO), Nu Skin Enterprises, Inc. (NYSE:NUS), and Integer Holdings Corporation (NYSE:ITGR). All of these stocks' market caps resemble MMYT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REZI,29,432922,-3 CNO,14,211942,1 NUS,20,283194,-3 ITGR,18,189554,-11 Average,20.25,279403,-4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $61 million in MMYT's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand CNO Financial Group Inc (NYSE:CNO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks MakeMyTrip Limited (NASDAQ:MMYT) is even less popular than CNO. Hedge funds dodged a bullet by taking a bearish stance towards MMYT. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MMYT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MMYT investors were disappointed as the stock returned -8.5% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.