Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is MarineMax, Inc. (NYSE:HZO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MarineMax, Inc. (NYSE:HZO) a buy here? Hedge funds are reducing their bets on the stock. The number of bullish hedge fund positions dropped by 4 lately. Our calculations also showed that HZO isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We're going to view the latest hedge fund action surrounding MarineMax, Inc. (NYSE:HZO).
How have hedgies been trading MarineMax, Inc. (NYSE:HZO)?
Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the first quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in HZO a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, GLG Partners, managed by Noam Gottesman, holds the number one position in MarineMax, Inc. (NYSE:HZO). GLG Partners has a $3.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $1.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Israel Englander's Millennium Management, Alec Litowitz and Ross Laser's Magnetar Capital and Peter Muller's PDT Partners.
Seeing as MarineMax, Inc. (NYSE:HZO) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain "tier" of hedgies who were dropping their positions entirely last quarter. At the top of the heap, Robert Bishop's Impala Asset Management said goodbye to the biggest stake of the "upper crust" of funds followed by Insider Monkey, valued at close to $13.8 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also cut its stock, about $2.4 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as MarineMax, Inc. (NYSE:HZO) but similarly valued. These stocks are Motorcar Parts of America, Inc. (NASDAQ:MPAA), Albireo Pharma, Inc. (NASDAQ:ALBO), MMTec, Inc. (NASDAQ:MTC), and Option Care Health, Inc. (NASDAQ:BIOS). This group of stocks' market caps resemble HZO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPAA,13,93803,4 ALBO,12,95008,-1 MTC,1,10,1 BIOS,15,65590,-1 Average,10.25,63603,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $8 million in HZO's case. Option Care Health, Inc. (NASDAQ:BIOS) is the most popular stock in this table. On the other hand MMTec, Inc. (NASDAQ:MTC) is the least popular one with only 1 bullish hedge fund positions. MarineMax, Inc. (NYSE:HZO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HZO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); HZO investors were disappointed as the stock returned -5.8% 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.