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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Medallion Financial Corp. (NASDAQ:MFIN).
Is MFIN stock a buy? Medallion Financial Corp. (NASDAQ:MFIN) has experienced a decrease in support from the world's most elite money managers lately. Medallion Financial Corp. (NASDAQ:MFIN) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 10. Our calculations also showed that MFIN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Mario Gabelli of GAMCO Investors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Now let's check out the key hedge fund action encompassing Medallion Financial Corp. (NASDAQ:MFIN).
Do Hedge Funds Think MFIN Is A Good Stock To Buy Now?
At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in MFIN a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in Medallion Financial Corp. (NASDAQ:MFIN). Millennium Management has a $1.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which holds a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish encompass Steve Pei's Gratia Capital, Jay Petschek and Steven Major's Corsair Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Gratia Capital allocated the biggest weight to Medallion Financial Corp. (NASDAQ:MFIN), around 1.37% of its 13F portfolio. Corsair Capital Management is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to MFIN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MFIN as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks similar to Medallion Financial Corp. (NASDAQ:MFIN). These stocks are Battalion Oil Corporation (NYSE:BATL), OncoSec Medical Incorporated (NASDAQ:ONCS), Voyager Therapeutics, Inc. (NASDAQ:VYGR), Protara Therapeutics, Inc. (NASDAQ:TARA), Calithera Biosciences Inc (NASDAQ:CALA), NACCO Industries, Inc. (NYSE:NC), and Alaska Communications Systems Group Inc (NASDAQ:ALSK). All of these stocks' market caps are closest to MFIN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BATL,5,110185,1 ONCS,8,6934,-1 VYGR,9,24139,2 TARA,14,91477,-2 CALA,12,27989,-2 NC,2,7883,-2 ALSK,11,36275,-7 Average,8.7,43555,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $4 million in MFIN's case. Protara Therapeutics, Inc. (NASDAQ:TARA) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 2 bullish hedge fund positions. Medallion Financial Corp. (NASDAQ:MFIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MFIN is 24.3. 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 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on MFIN as the stock returned 33.5% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.