Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Mizuho Financial Group Inc. (NYSE:MFG).
Is Mizuho Financial Group Inc. (NYSE:MFG) a safe investment today? Investors who are in the know are taking a bullish view. The number of bullish hedge fund positions went up by 4 lately. Our calculations also showed that MFG isn't among the 30 most popular stocks among hedge funds. MFG was in 6 hedge funds' portfolios at the end of June. There were 2 hedge funds in our database with MFG positions at the end of the previous quarter.
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 some fund managers who are betting on Dow reaching 40000 in a year, 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. Let's check out the latest hedge fund action surrounding Mizuho Financial Group Inc. (NYSE:MFG).
What does smart money think about Mizuho Financial Group Inc. (NYSE:MFG)?
At Q2's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 200% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MFG over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies has the most valuable position in Mizuho Financial Group Inc. (NYSE:MFG), worth close to $11.7 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, holding a $8.5 million position; 0.3% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and Israel Englander's Millennium Management.
Consequently, specific money managers were leading the bulls' herd. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the most outsized position in Mizuho Financial Group Inc. (NYSE:MFG). LMR Partners had $8.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks similar to Mizuho Financial Group Inc. (NYSE:MFG). We will take a look at Occidental Petroleum Corporation (NYSE:OXY), Manulife Financial Corporation (NYSE:MFC), Marathon Petroleum Corporation (NYSE:MPC), and Ross Stores, Inc. (NASDAQ:ROST). This group of stocks' market valuations are closest to MFG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OXY,42,2688402,7 MFC,16,277367,0 MPC,60,3075008,-5 ROST,32,862087,3 Average,37.5,1725716,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1726 million. That figure was $22 million in MFG's case. Marathon Petroleum Corporation (NYSE:MPC) is the most popular stock in this table. On the other hand Manulife Financial Corporation (NYSE:MFC) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Mizuho Financial Group Inc. (NYSE:MFG) is even less popular than MFC. Hedge funds clearly dropped the ball on MFG as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on MFG as the stock returned 6.6% during the third quarter and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.