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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards The Marcus Corporation (NYSE:MCS) to find out whether there were any major changes in hedge funds' views.
Is MCS a good stock to buy now? The Marcus Corporation (NYSE:MCS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of September. Our calculations also showed that MCS 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). At the end of this article we will also compare MCS to other stocks including Greenlight Capital Re, Ltd. (NASDAQ:GLRE), Preformed Line Products Company (NASDAQ:PLPC), and Sierra Metals Inc. (NYSE:SMTS) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are seen as slow, outdated investment vehicles of the past. While there are more than 8000 funds trading at present, We hone in on the leaders of this group, around 850 funds. These money managers manage most of all hedge funds' total asset base, and by observing their highest performing stock picks, Insider Monkey has determined a few investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Eric Singer of VIEX 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. Now we're going to view the new hedge fund action encompassing The Marcus Corporation (NYSE:MCS).
Do Hedge Funds Think MCS Is A Good Stock To Buy Now?
At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in MCS over the last 21 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 The Marcus Corporation (NYSE:MCS) was held by GAMCO Investors, which reported holding $5.5 million worth of stock at the end of September. It was followed by D E Shaw with a $2.8 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and Soros Fund Management. In terms of the portfolio weights assigned to each position VIEX Capital Advisors allocated the biggest weight to The Marcus Corporation (NYSE:MCS), around 0.89% of its 13F portfolio. VIEX Capital Advisors is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to MCS.
Seeing as The Marcus Corporation (NYSE:MCS) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few funds who sold off their entire stakes by the end of the third quarter. Interestingly, Renaissance Technologies dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $1.3 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dumped its stock, about $1 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to The Marcus Corporation (NYSE:MCS). These stocks are Greenlight Capital Re, Ltd. (NASDAQ:GLRE), Preformed Line Products Company (NASDAQ:PLPC), Sierra Metals Inc. (NYSE:SMTS), Gold Resource Corporation (NYSE:GORO), American Renal Associates Holdings, Inc (NYSE:ARA), TELA Bio, Inc. (NASDAQ:TELA), and Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR). All of these stocks' market caps resemble MCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GLRE,4,1004,-2 PLPC,5,20457,-2 SMTS,3,1279,1 GORO,4,1738,-3 ARA,5,130082,0 TELA,7,75777,-2 EIGR,26,87225,0 Average,7.7,45366,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.7 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $15 million in MCS's case. Eiger BioPharmaceuticals, Inc. (NASDAQ:EIGR) is the most popular stock in this table. On the other hand Sierra Metals Inc. (NYSE:SMTS) is the least popular one with only 3 bullish hedge fund positions. The Marcus Corporation (NYSE:MCS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCS is 51.1. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on MCS as the stock returned 57.3% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.