At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Manchester United PLC (NYSE:MANU).
Manchester United PLC (NYSE:MANU) was in 8 hedge funds' portfolios at the end of March. MANU has seen a decrease in activity from the world's largest hedge funds of late. There were 10 hedge funds in our database with MANU positions at the end of the previous quarter. Our calculations also showed that MANU 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.
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 take a glance at the new hedge fund action surrounding Manchester United PLC (NYSE:MANU).
What does smart money think about Manchester United PLC (NYSE:MANU)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in MANU over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Manchester United PLC (NYSE:MANU), with a stake worth $12.6 million reported as of the end of September. Trailing Renaissance Technologies was Sandell Asset Management, which amassed a stake valued at $3.3 million. D E Shaw, Alyeska Investment Group, and Potrero Capital Research 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 Potrero Capital Research allocated the biggest weight to Manchester United PLC (NYSE:MANU), around 1.86% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, earmarking 1.17 percent of its 13F equity portfolio to MANU.
Since Manchester United PLC (NYSE:MANU) has experienced falling interest from the aggregate hedge fund industry, it's safe to say that there exists a select few hedgies that decided to sell off their full holdings by the end of the first quarter. Intriguingly, Israel Englander's Millennium Management said goodbye to the largest position of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $0.5 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital was right behind this move, as the fund cut about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks similar to Manchester United PLC (NYSE:MANU). We will take a look at TreeHouse Foods Inc. (NYSE:THS), Halozyme Therapeutics, Inc. (NASDAQ:HALO), ChemoCentryx Inc (NASDAQ:CCXI), and JetBlue Airways Corporation (NASDAQ:JBLU). This group of stocks' market values match MANU's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position THS,28,225828,1 HALO,23,154300,-2 CCXI,30,561624,7 JBLU,36,189627,1 Average,29.25,282845,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $283 million. That figure was $28 million in MANU's case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Manchester United PLC (NYSE:MANU) is even less popular than HALO. Hedge funds dodged a bullet by taking a bearish stance towards MANU. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately MANU wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MANU investors were disappointed as the stock returned 9.3% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.