While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 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 MarineMax, Inc. (NYSE:HZO).
Is HZO a good stock to buy now? Hedge fund interest in MarineMax, Inc. (NYSE:HZO) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HZO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as XBiotech Inc. (NASDAQ:XBIT), Independence Holding Company (NYSE:IHC), and OneSpaWorld Holdings Limited (NASDAQ:OSW) to gather more data points. 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Anna Nikolayevsky of Axel Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we're going to take a look at the key hedge fund action encompassing MarineMax, Inc. (NYSE:HZO).
Do Hedge Funds Think HZO Is A Good Stock To Buy Now?
At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in HZO a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of MarineMax, Inc. (NYSE:HZO), with a stake worth $10.2 million reported as of the end of September. Trailing Arrowstreet Capital was Driehaus Capital, which amassed a stake valued at $6.8 million. Marshall Wace LLP, Intrinsic Edge Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to MarineMax, Inc. (NYSE:HZO), around 1.79% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, earmarking 1.21 percent of its 13F equity portfolio to HZO.
Because MarineMax, Inc. (NYSE:HZO) has experienced falling interest from the entirety of the hedge funds we track, it's safe to say that there were a few funds who sold off their full holdings last quarter. At the top of the heap, Israel Englander's Millennium Management sold off the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $9 million in stock. Brad Farber's fund, Atika Capital, also cut its stock, about $1.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as MarineMax, Inc. (NYSE:HZO) but similarly valued. We will take a look at XBiotech Inc. (NASDAQ:XBIT), Independence Holding Company (NYSE:IHC), OneSpaWorld Holdings Limited (NASDAQ:OSW), Green Plains Inc. (NASDAQ:GPRE), Genesis Energy, L.P. (NYSE:GEL), The York Water Company (NASDAQ:YORW), and Adecoagro SA (NYSE:AGRO). This group of stocks' market caps match HZO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XBIT,4,2598,0 IHC,5,26115,0 OSW,10,67325,-4 GPRE,17,156646,-3 GEL,3,6208,-1 YORW,9,16014,1 AGRO,10,141512,-3 Average,8.3,59488,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $53 million in HZO's case. Green Plains Inc. (NASDAQ:GPRE) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks MarineMax, Inc. (NYSE:HZO) is more popular among hedge funds. Our overall hedge fund sentiment score for HZO is 85. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on HZO as the stock returned 20.7% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
Greenlight Capital 2019 Q3 Investor Letter