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In this article we will check out the progression of hedge fund sentiment towards Mr. Cooper Group Inc. (NASDAQ:COOP) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Mr. Cooper Group Inc. (NASDAQ:COOP) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. COOP has seen an increase in hedge fund sentiment recently. There were 22 hedge funds in our database with COOP positions at the end of the fourth quarter. Our calculations also showed that COOP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Leon Cooperman of Omega Advisors
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Do Hedge Funds Think COOP Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards COOP over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Omega Advisors was the largest shareholder of Mr. Cooper Group Inc. (NASDAQ:COOP), with a stake worth $147.7 million reported as of the end of March. Trailing Omega Advisors was HG Vora Capital Management, which amassed a stake valued at $142.5 million. Diamond Hill Capital, Oaktree Capital Management, and Inherent Group 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 OCO Capital Partners allocated the biggest weight to Mr. Cooper Group Inc. (NASDAQ:COOP), around 27.99% of its 13F portfolio. Nierenberg Investment Management is also relatively very bullish on the stock, dishing out 20.8 percent of its 13F equity portfolio to COOP.
As industrywide interest jumped, specific money managers have been driving this bullishness. Nierenberg Investment Management, managed by David Nierenberg, created the most outsized position in Mr. Cooper Group Inc. (NASDAQ:COOP). Nierenberg Investment Management had $26.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $8.3 million position during the quarter. The other funds with new positions in the stock are Wayne Cooperman's Cobalt Capital Management, Donald Sussman's Paloma Partners, and Martin D. Sass's MD Sass.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Mr. Cooper Group Inc. (NASDAQ:COOP) but similarly valued. We will take a look at VEON Ltd. (NASDAQ:VEON), Michaels Companies Inc (NASDAQ:MIK), fuboTV Inc. (NYSE:FUBO), Federated Hermes, Inc. (NYSE:FHI), Columbia Banking System Inc (NASDAQ:COLB), Patterson Companies, Inc. (NASDAQ:PDCO), and Sprout Social, Inc. (NASDAQ:SPT). This group of stocks' market caps resemble COOP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VEON,8,20221,2 MIK,33,573441,0 FUBO,18,207863,-13 FHI,27,190803,-6 COLB,14,157150,2 PDCO,20,142258,2 SPT,24,283496,-6 Average,20.6,225033,-2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $639 million in COOP's case. Michaels Companies Inc (NASDAQ:MIK) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 8 bullish hedge fund positions. Mr. Cooper Group Inc. (NASDAQ:COOP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for COOP is 60.2. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately COOP wasn't nearly as popular as these 5 stocks and hedge funds that were betting on COOP were disappointed as the stock returned -5.3% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.