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Hedge Funds Have Never Been This Bullish On Six Flags Entertainment (SIX)

Nina Todic

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Six Flags Entertainment Corporation (NYSE:SIX).

Is Six Flags Entertainment Corporation (NYSE:SIX) a great investment now? Money managers are taking an optimistic view. The number of long hedge fund bets increased by 7 in recent months. Our calculations also showed that SIX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). SIX was in 37 hedge funds' portfolios at the end of September. There were 30 hedge funds in our database with SIX positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In today’s marketplace there are numerous metrics stock market investors can use to size up their holdings. Some of the less known metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a superb margin (see the details here).

[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]

John Overdeck of Two Sigma

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's view the latest hedge fund action surrounding Six Flags Entertainment Corporation (NYSE:SIX).

How are hedge funds trading Six Flags Entertainment Corporation (NYSE:SIX)?

Heading into the fourth quarter of 2019, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SIX over the last 17 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

No of Hedge Funds with SIX Positions

When looking at the institutional investors followed by Insider Monkey, Rehan Jaffer's H Partners Management has the number one position in Six Flags Entertainment Corporation  (NYSE:SIX), worth close to $240.3 million, accounting for 28% of its total 13F portfolio. The second most bullish fund manager is Cardinal Capital, led by Amy Minella, holding a $97.2 million position; 3.2% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish include John Overdeck and David Siegel's Two Sigma Advisors, David E. Shaw's D E Shaw and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position H Partners Management allocated the biggest weight to Six Flags Entertainment Corporation (NYSE:SIX), around 28.01% of its portfolio. Becker Drapkin Management is also relatively very bullish on the stock, setting aside 6.54 percent of its 13F equity portfolio to SIX.

Now, specific money managers have been driving this bullishness. SG Capital Management, managed by Ken Grossman and Glen Schneider, established the most valuable position in Six Flags Entertainment Corporation (NYSE:SIX). SG Capital Management had $7.8 million invested in the company at the end of the quarter. Elise Di Vincenzo Crumbine's Stormborn Capital Management also made a $5.6 million investment in the stock during the quarter. The other funds with brand new SIX positions are Israel Englander's Millennium Management, Renaissance Technologies, and Robert Pohly's Samlyn Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Six Flags Entertainment Corporation (NYSE:SIX) but similarly valued. These stocks are LG Display Co Ltd. (NYSE:LPL), Deckers Outdoor Corporation (NASDAQ:DECK), Wyndham Destinations, Inc. (NYSE:WYND), and Perspecta Inc. (NYSE:PRSP). All of these stocks' market caps resemble SIX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPL,3,9362,0 DECK,26,415436,1 WYND,21,521654,-1 PRSP,40,719169,0 Average,22.5,416405,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $416 million. That figure was $639 million in SIX's case. Perspecta Inc. (NYSE:PRSP) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 3 bullish hedge fund positions. Six Flags Entertainment Corporation (NYSE:SIX) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SIX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SIX were disappointed as the stock returned -12.8% during the fourth quarter (through the end of November) 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 this year.

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

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