Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Mizuho Financial Group Inc. (NYSE:MFG) investors should pay attention to an increase in hedge fund sentiment of late. Our calculations also showed that MFG isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's analyze the key hedge fund action surrounding Mizuho Financial Group Inc. (NYSE:MFG).
How are hedge funds trading Mizuho Financial Group Inc. (NYSE:MFG)?
Heading into the first quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MFG over the last 14 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Mizuho Financial Group Inc. (NYSE:MFG) was held by Renaissance Technologies, which reported holding $6.2 million worth of stock at the end of September. It was followed by D E Shaw with a $1.3 million position. Other investors bullish on the company included Citadel Investment Group and Two Sigma Advisors. Consequently, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Mizuho Financial Group Inc. (NYSE:MFG). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $0.1 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks similar to Mizuho Financial Group Inc. (NYSE:MFG). We will take a look at Waste Management, Inc. (NYSE:WM), Emerson Electric Co. (NYSE:EMR), Marriott International Inc (NASDAQ:MAR), and Prologis Inc (NYSE:PLD). All of these stocks' market caps match MFG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WM,36,3118349,2 EMR,34,944770,2 MAR,32,1801801,3 PLD,30,476675,5 Average,33,1585399,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1585 million. That figure was $8 million in MFG's case. Waste Management, Inc. (NYSE:WM) is the most popular stock in this table. On the other hand Prologis Inc (NYSE:PLD) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Mizuho Financial Group Inc. (NYSE:MFG) is even less popular than PLD. Clearly hedge funds don't like the stock. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately MFG wasn't in this group. Hedge funds that bet on MFG were disappointed as the stock returned 3% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.