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Is Mattel, Inc. (MAT) Going to Burn These Hedge Funds?

Abigail Fisher

Is Mattel, Inc. (NASDAQ:MAT) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Mattel, Inc. (NASDAQ:MAT) investors should be aware of a decrease in enthusiasm from smart money lately. MAT was in 16 hedge funds' portfolios at the end of June. There were 21 hedge funds in our database with MAT positions at the end of the previous quarter. Our calculations also showed that MAT isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most stock holders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, We look at the leaders of this group, around 750 funds. These money managers shepherd the lion's share of all hedge funds' total capital, and by shadowing their top equity investments, Insider Monkey has identified several investment strategies that have historically beaten the broader indices. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

MAT_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the recent hedge fund action encompassing Mattel, Inc. (NASDAQ:MAT).

What have hedge funds been doing with Mattel, Inc. (NASDAQ:MAT)?

Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MAT over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

01 Mason Hawkins, Southeastern Asset Management

Among these funds, Southeastern Asset Management held the most valuable stake in Mattel, Inc. (NASDAQ:MAT), which was worth $388.5 million at the end of the second quarter. On the second spot was Ariel Investments which amassed $153.5 million worth of shares. Moreover, Jericho Capital Asset Management, Citadel Investment Group, and Gotham Asset Management were also bullish on Mattel, Inc. (NASDAQ:MAT), allocating a large percentage of their portfolios to this stock.

Because Mattel, Inc. (NASDAQ:MAT) has faced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds that decided to sell off their positions entirely heading into Q3. It's worth mentioning that Renaissance Technologies dumped the biggest stake of the 750 funds followed by Insider Monkey, comprising about $23.6 million in call options. Geoffrey Raynor's fund, Q Investments (Specter Holdings), also said goodbye to its call options, about $13 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 5 funds heading into Q3.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Mattel, Inc. (NASDAQ:MAT) but similarly valued. We will take a look at RLI Corp. (NYSE:RLI), EQT Corporation (NYSE:EQT), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), and Stag Industrial Inc (NYSE:STAG). This group of stocks' market caps are similar to MAT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RLI,15,172039,2 EQT,35,873071,-1 ACAD,21,1345657,1 STAG,11,138143,-4 Average,20.5,632228,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $632 million. That figure was $651 million in MAT's case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 11 bullish hedge fund positions. Mattel, Inc. (NASDAQ:MAT) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MAT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MAT investors were disappointed as the stock returned 1.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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