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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Mattel, Inc. (NASDAQ:MAT) changed recently.
Mattel, Inc. (NASDAQ:MAT) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds' portfolios at the end of March. Our calculations also showed that MAT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Ascendis Pharma A/S (NASDAQ:ASND), and TopBuild Corp (NYSE:BLD) to gather more data points.
To most traders, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, We look at the bigwigs of this club, around 850 funds. Most estimates calculate that this group of people administer bulk of the hedge fund industry's total capital, and by tracking their unrivaled investments, Insider Monkey has brought to light a few investment strategies that have historically surpassed the S&P 500 index. 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 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Mason Hawkins of Southeastern Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks 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 let's take a gander at the new hedge fund action encompassing Mattel, Inc. (NASDAQ:MAT).
Do Hedge Funds Think MAT Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in MAT over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Southeastern Asset Management held the most valuable stake in Mattel, Inc. (NASDAQ:MAT), which was worth $321.7 million at the end of the fourth quarter. On the second spot was Ariel Investments which amassed $305 million worth of shares. Citadel Investment Group, Arrowstreet Capital, and Holocene Advisors 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 Southeastern Asset Management allocated the biggest weight to Mattel, Inc. (NASDAQ:MAT), around 6.88% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, dishing out 6.28 percent of its 13F equity portfolio to MAT.
Since Mattel, Inc. (NASDAQ:MAT) has faced bearish sentiment from the smart money, logic holds that there lies a certain "tier" of fund managers who sold off their entire stakes in the first quarter. It's worth mentioning that Principal Global Investors's Columbus Circle Investors dumped the largest stake of the 750 funds tracked by Insider Monkey, valued at close to $18 million in stock, and Anand Parekh's Alyeska Investment Group was right behind this move, as the fund said goodbye to about $16.5 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at 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 Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Ascendis Pharma A/S (NASDAQ:ASND), TopBuild Corp (NYSE:BLD), Lumentum Holdings Inc (NASDAQ:LITE), Coty Inc (NYSE:COTY), Denali Therapeutics Inc. (NASDAQ:DNLI), and TFI International Inc. (NYSE:TFII). This group of stocks' market caps are closest to MAT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVAL,5,9921,1 ASND,28,2078115,-3 BLD,18,103995,-1 LITE,31,329570,-8 COTY,25,262735,3 DNLI,26,250609,6 TFII,19,164356,9 Average,21.7,457043,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $457 million. That figure was $873 million in MAT's case. Lumentum Holdings Inc (NASDAQ:LITE) is the most popular stock in this table. On the other hand Grupo Aval Acciones y Valores S.A. (NYSE:AVAL) is the least popular one with only 5 bullish hedge fund positions. Mattel, Inc. (NASDAQ:MAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MAT is 63.7. 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 positive signal but 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 July 9th and beat the market again by 6.7 percentage points. Unfortunately MAT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MAT were disappointed as the stock returned 0.8% since the end of March (through 7/9) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.