Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before the Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first quarter, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first quarter still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Acushnet Holdings Corp. (NYSE:GOLF) changed recently.
Acushnet Holdings Corp. (NYSE:GOLF) has seen an increase in enthusiasm from smart money of late. GOLF was in 13 hedge funds' portfolios at the end of March. There were 11 hedge funds in our database with GOLF positions at the end of the previous quarter. Our calculations also showed that GOLF isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a glance at the fresh hedge fund action encompassing Acushnet Holdings Corp. (NYSE:GOLF).
Hedge fund activity in Acushnet Holdings Corp. (NYSE:GOLF)
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in GOLF a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Sensato Capital Management, managed by Ernest Chow and Jonathan Howe, holds the number one position in Acushnet Holdings Corp. (NYSE:GOLF). Sensato Capital Management has a $9 million position in the stock, comprising 2.5% of its 13F portfolio. On Sensato Capital Management's heels is Israel Englander of Millennium Management, with a $3.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions comprise Cliff Asness's AQR Capital Management, Joel Greenblatt's Gotham Asset Management and D. E. Shaw's D E Shaw.
As one would reasonably expect, key money managers have jumped into Acushnet Holdings Corp. (NYSE:GOLF) headfirst. Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, initiated the largest position in Acushnet Holdings Corp. (NYSE:GOLF). Blue Mountain Capital had $0.6 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new GOLF position is Jim Simons's Renaissance Technologies.
Let's go over hedge fund activity in other stocks similar to Acushnet Holdings Corp. (NYSE:GOLF). These stocks are NMI Holdings Inc (NASDAQ:NMIH), Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR), Liberty Oilfield Services Inc. (NYSE:LBRT), and Eagle Bancorp, Inc. (NASDAQ:EGBN). All of these stocks' market caps resemble GOLF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NMIH,15,229247,-1 ARWR,16,172031,3 LBRT,14,77200,2 EGBN,11,45405,-1 Average,14,130971,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $20 million in GOLF's case. Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) is the most popular stock in this table. On the other hand Eagle Bancorp, Inc. (NASDAQ:EGBN) is the least popular one with only 11 bullish hedge fund positions. Acushnet Holdings Corp. (NYSE:GOLF) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on GOLF as the stock returned 16.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.