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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI).
Is Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) a buy right now? Prominent investors were getting less bullish. The number of bullish hedge fund bets were cut by 6 in recent months. Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that MRVI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
To most market participants, hedge funds are perceived as slow, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our researchers choose to focus on the crème de la crème of this club, about 850 funds. These investment experts preside over the majority of all hedge funds' total asset base, and by tailing their highest performing stock picks, Insider Monkey has come up with many investment strategies that have historically beaten the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Daniel Sundheim of D1 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a glance at the latest hedge fund action encompassing Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI).
Do Hedge Funds Think MRVI Is A Good Stock To Buy Now?
At second quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRVI over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) was held by Select Equity Group, which reported holding $327.4 million worth of stock at the end of June. It was followed by Healthcor Management LP with a $52.4 million position. Other investors bullish on the company included D1 Capital Partners, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), around 2.48% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, setting aside 2.09 percent of its 13F equity portfolio to MRVI.
Judging by the fact that Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedge funds that elected to cut their positions entirely in the second quarter. At the top of the heap, Dmitry Balyasny's Balyasny Asset Management said goodbye to the largest position of the 750 funds watched by Insider Monkey, valued at an estimated $16.6 million in stock, and Efrem Kamen's Pura Vida Investments was right behind this move, as the fund cut about $8.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 6 funds in the second quarter.
Let's check out hedge fund activity in other stocks similar to Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI). These stocks are Marathon Oil Corporation (NYSE:MRO), PRA Health Sciences Inc (NASDAQ:PRAH), The Scotts Miracle-Gro Company (NYSE:SMG), Deckers Outdoor Corp (NASDAQ:DECK), ChargePoint Holdings, Inc. (NYSE:CHPT), ironSource Ltd. (NYSE:IS), and American Financial Group (NYSE:AFG). This group of stocks' market caps are similar to MRVI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRO,34,655729,5 PRAH,43,2995527,8 SMG,32,369779,-2 DECK,44,1473505,4 CHPT,17,149306,-7 IS,32,771885,-20 AFG,19,219952,-2 Average,31.6,947955,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $948 million. That figure was $573 million in MRVI's case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand ChargePoint Holdings, Inc. (NYSE:CHPT) is the least popular one with only 17 bullish hedge fund positions. Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MRVI is 22.2. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately MRVI wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MRVI investors were disappointed as the stock returned 0.6% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.