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Hedge Funds Are Selling MakeMyTrip Limited (MMYT)

Abigail Fisher

In this article we will check out the progression of hedge fund sentiment towards MakeMyTrip Limited (NASDAQ:MMYT) 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.

MakeMyTrip Limited (NASDAQ:MMYT) investors should pay attention to a decrease in hedge fund interest lately. Our calculations also showed that MMYT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_758500" align="aligncenter" width="395"] Daniel Gold of QVT Financial[/caption]

Daniel Gold QVT Financial

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's review the recent hedge fund action regarding MakeMyTrip Limited (NASDAQ:MMYT).

Hedge fund activity in MakeMyTrip Limited (NASDAQ:MMYT)

At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MMYT over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Thomas E. Claugus's GMT Capital has the largest position in MakeMyTrip Limited (NASDAQ:MMYT), worth close to $15.6 million, accounting for 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is QVT Financial, managed by Daniel Gold, which holds a $6.7 million position; 1.6% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of Dmitry Balyasny's Balyasny Asset Management, Renaissance Technologies and Ken Fisher's Fisher Asset Management. In terms of the portfolio weights assigned to each position QVT Financial allocated the biggest weight to MakeMyTrip Limited (NASDAQ:MMYT), around 1.56% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 0.88 percent of its 13F equity portfolio to MMYT.

Judging by the fact that MakeMyTrip Limited (NASDAQ:MMYT) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there exists a select few fund managers that slashed their full holdings by the end of the first quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP cut the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $2.7 million in stock, and Mika Toikka's AlphaCrest Capital Management was right behind this move, as the fund dropped about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds by the end of the first quarter.

Let's go over hedge fund activity in other stocks similar to MakeMyTrip Limited (NASDAQ:MMYT). These stocks are Renasant Corporation (NASDAQ:RNST), LTC Properties Inc (NYSE:LTC), International Game Technology PLC (NYSE:IGT), and Helios Technologies, Inc. (NASDAQ:HLIO). This group of stocks' market caps match MMYT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RNST,12,18604,0 LTC,11,25083,1 IGT,25,55994,-5 HLIO,4,53242,-2 Average,13,38231,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $33 million in MMYT's case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand Helios Technologies, Inc. (NASDAQ:HLIO) is the least popular one with only 4 bullish hedge fund positions. MakeMyTrip Limited (NASDAQ:MMYT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on MMYT as the stock returned 42.3% during the second quarter and outperformed the market by an even larger margin.

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

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